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In this episode of the Energy Ink Podcast, Alberta Oil’s deputy editor Todd Coyne sits down with Dave Mowat, the chair of the Alberta government’s resource royalty review panel, for an exclusive peak behind the curtain of what’s in store for the province’s oil and gas sector.

It should come as no surprise to anyone in the energy sector that the media landscape in British Columbia isn’t particularly receptive to their interests. But it might come as a surprise to some just how hostile the media that serves it can be. We’re going to have a feature on this phenomenon in a future issue of Alberta Oil magazine, but for the time being I think it’s worth pointing out a recent story published by the Vancouver Observer in which it presents the existence of political donations by the energy sector to the BC Liberal Party as though it was some sort of conclusive evidence of influence peddling.

The smoking gun in the piece – at least, that’s how it’s presented – is the fundraiser that CNRL’s Murray Edwards held at the Calgary Petroleum Club in 2012 for Christy Clark. “While many believed the premier’s Alberta financial overture was the first of its kind, investigation reveals that the BC Liberals have raised millions from Alberta-based oil and gas companies for more than a decade….According to data compiled by Elections BC and Elections Alberta, corporate oil and gas donations to the BC Liberals have significantly outstripped comparable gifts to the then-ruling Alberta PC Party. Since 2005, the largest oil and gas corporate donors gave more than $3.1 million to the BC Liberals, relative to a mere $1.8 million to the Alberta Conservatives.”

Let’s set aside, for the moment, the fact that those numbers for the Alberta PCs are probably on the low side. A PC insider that I spoke to – and yes, they still exist – noted that the party’s annual average fundraising total was in excess of that figure, and he guesstimated that at least 70 per cent of its donor base was tied in some way to the oil and gas industry. I didn’t delve too deeply into the Elections Alberta reports from the last ten years, but my best guess would put that figure somewhere closer to 25 per cent. There’s also the fact that it ignored the existence of the Wildrose, a party that was effectively seeded by influential energy sector players who thought the Progressive Conservatives had drifted too far away from their base. It was, in essence, a response to former Premier Ed Stelmach’s punitive royalty review, and it stands to reason that much of the money that would have gone into PC coffers was diverted into the Wildrose’s instead.

For example, the VO piece notes that “over 10 years, Calgary-based energy giant Encana and its oil sands spinoff Cenovus donated more than $1 million to the BC Liberal Party, in stark contrast with donations of less than $300,000 to the Alberta Progressive Conservatives within the same time frame.” But that’s partially because it was also making donations to the Wildrose. In 2012, then-CEO Randy Eresman and his wife Shelly both donated $15,000 to the upstart party, with the company chipping in another $5,000. Cenovus, for its part, contributed $4,500 to the Wildrose. In order to get a true picture of the energy sector’s financial contributions to political parties in Alberta, it stands to reason that you have to sum the contributions made to both the Wildrose and the PCs.

There’s also some glaring factual errors in the piece. “When corporations aren’t based in B.C. or have little to no business in the province, he [Dermod Travis, the executive director of Integrity BC, a watchdog group that did the math cited in the piece] said, the numbers become suspect.” It goes on to note that Suncor, “which has no B.C. operations, gave just under $40,000 to the BC Liberals.” This is nowhere near the truth, given that Suncor has four distribution terminals in the province from which it supplies its dozens of Petro-Canada gas stations. There’s also the fact that, while it sold off most of its conventional natural gas assets in 2013 for $1 billion, it held onto its Montney acreage. Where is that located? British Columbia, of course.

But even if the math the Vancouver Observer uses in its piece is correct, it’s still not evidence of anything other than an industry that rationally pursues its own self-interest. Unlike its Albertan counterpart, the BC NDP is unapologetically hostile to the energy sector and its key interests, be it fracking activity, energy exports or pipeline projects. And in the lead-up to the 2013 provincial election it looked very much like the NDP, then led by Adrian Dix, was going to coast to victory. Given that, it makes perfect sense that Murray Edwards and his friends would host a fundraiser for the party that wasn’t openly antagonistic towards their companies or their interests.

And make no mistake, their interests extend into British Columbia. While it might be something of a mystery to most people who live in the Lower Mainland, there is a sizeable gas play in the province’s northeast and it’s actively being tapped by a host of Albertan companies. As such, the donations being made by energy sector companies isn’t a reflection of their desire to project influence or interfere with policy-making in British Columbia, as the VO piece hinted at. It’s the normal cost of doing business in an industry where regulatory changes can have a material impact on your top and bottom lines – and in a two-party province where one party has both a good chance of winning and a bad habit of running the economy into the ditch.

Columnists get paid to generate a reaction, and Claudia Cattaneo’s piece last Thursday in the Financial Post almost certainly accomplished that. In it, she called out Premier Rachel Notley for being insufficiently enthusiastic in promoting the energy sector’s interests, and said that she needs to decide which “team” she’s on. “With Notley abdicating her role as the sector’s champion,” Cattaneo wrote, “it will be up to Wall for now to restore balance to the energy debate.” That kind of language is designed to attract attention, both from those who think the energy sector has held too much influence over Alberta’s political leaders in recent years and those who don’t think it holds near enough over the ones that are currently in office. And while there’s a bit too much rhetorical torque in the piece for my taste – the description of Notley as a “rookie” premier is clearly designed to undermine her authority, and it’s an adjective I don’t recall seeing attached to Jim Prentice’s name – it’s still a fine piece of provocation.

That said, it’s one her energy sector readers should probably disregard. That’s because the idea that informs it – that getting pipelines built in this country is merely a matter of expressing sufficient enthusiasm for the industry that fills them – has already been proven false. Former Premier Alison Redford may have come up short on a few fronts – ethics, for example – but she was never anything other than aggressive and enthusiastic in her efforts to stump for new pipelines. Indeed, the Canadian Energy Strategy that was released this morning was a reflection of that desire to promote Alberta’s energy assets in other parts of the country. Her predecessor, Jim Prentice, was even more closely identified with the project of getting pipelines built – and in, as he liked to say, every direction. If there was one thing that everyone agreed upon in Alberta when Prentice was handed the reins of the Progressive Conservative Party, it was that he was uniquely qualified to make that happen.

And yet, it never did. Maybe that’s because he didn’t have enough time to work with. But maybe that’s because the art of the sell is about more than broadcasting the virtues of your product at the top of your lungs. Instead, it’s about building trust, overcoming objections and understanding the customer. And make no mistake: for better or worse, Canadians are now the customer. It would be nice if we could all pile into a DeLorean and travel back to a time when the people asking questions about pipeline projects were engineers who already knew most of the answers, and when shrill activists weren’t treating them as a proxy for all of the world’s problems. But we can’t, and so we’re going to need to find a way to convince those people – or, at least, enough of them to drown out the shriller ones – that what we want to do is in their interests as well as our own. That’s not “giving Quebec a veto,” as Cattaneo suggested Notley did this week. It’s acknowledging the facts on the ground and trying to respond accordingly.

Yes, it might be comforting for some to hear Notley proclaim, as Saskatchewan Premier Brad Wall did, that western provinces will brook no disagreement when it comes to the virtues of energy extraction or its role as a nation building activity. And it might be comforting to hear her vocally support Northern Gateway and Keystone XL rather than suggesting that the work of convincing the public is up to the project’s proponents rather than the premier of Alberta. But comfort, to be blunt, is overrated. Northern Gateway hinges on earning the support of First Nations communities in British Columbia – and British Columbians themselves, to a degree – and Notley almost certainly knows that she’s more useful to Enbridge as a neutral broker than another cheerleader.

So it is with Keystone XL, where years of lobbying and millions of dollars’ worth of advertising have done almost nothing to change the direction of the debate around it, which hinges far more on Congressional politics and presidential legacy building than it does the degree to which the Premier of Alberta supports the project. Indeed, look at the lengths to which Premiers Redford and Prentice went to profess their undying support for its merits and how little it actually accomplished. Keystone’s fate will be decided by American politicians, not Canadian ones, and Notley seems to understand that. Interpreting that understanding as opposition – or, worse, a lack of loyalty or faith – seems misguided.

As she demonstrated in the speech she delivered to investors and oil sands executives at the Calgary Stampede, Rachel Notley understands why the oil sands matter to Alberta – and to Canada. She also demonstrated that she’s capable of selling its virtues just as effectively as any of her predecessors. But therein lies the rub: she’s trying to sell them to other people and other provinces, and a good salesperson doesn’t just thump their chest and keep repeating the same talking points. If I’m buying a car, I don’t want to the salesperson to keep telling me how great the Corinthian Leather seating is – I want them to listen to my questions about the engine and the sticker price and give me fair and honest answers. Canadians have been asking questions about climate change and the relationship that it has with pipeline projects and energy extraction. Notley’s predecessors chose to ignore those questions. She is choosing to address them. Time will tell whether she’s a better salesperson than them. But there’s one thing we know for certain: she can’t possibly be any less successful.

]]>Alberta Oil celebrated the achievements of the companies on its “The 200” list on June 3rd in Calgary, an event that included an engaging panel discussion. CAPP’s Tim McMillan moderated the discussion between Marcel Coutu, Jim Gray, Chris Seasons and Michael J. Tims for those in attendance. In this exclusive episode of the Energy Ink podcast, you too can hear what the panel had to say.

]]>http://www.albertaoilmagazine.com/2015/07/the-energy-ink-podcast-our-panel-of-energy-heavy-hitters-talks-shop-at-the-200/feed/0Strategy Sessionhttp://www.albertaoilmagazine.com/2015/07/strategy-session/
http://www.albertaoilmagazine.com/2015/07/strategy-session/#commentsThu, 16 Jul 2015 20:51:17 +0000http://www.albertaoilmagazine.com/?p=36924Are Canada’s premiers about to strike a deal on a Canadian Energy Strategy? More importantly, does it really matter if they do?

Can Canada’s premiers finally put their names on the national energy strategy that they’ve been working on for years now? That’s the main event at this year’s Council of the Federation in St. John’s, and while there’s speculation that they’ll finally seal a deal in reality it might already be a dead letter. Even if the strategy does find a way to get past the various political landmines that are lying in wait, it might not matter all that much. That’s because the very nature of the Canadian Energy Strategy begs a much more important question: Are the provinces really the roadblock standing between Alberta’s energy products and global markets? After all, B.C. Premier Christy Clark may have tabled her “five conditions” for Northern Gateway, but that was more about politics than actual policy. Premiers like her, whether they choose to acknowledge it or not, still have to answer to the constitution. As Alberta Party leader Greg Clark said in a blog post, “Inter-provincial pipeline projects follow a clear federal regulatory process. If that process is followed I expect Energy East pipeline will go ahead. With or without Quebec’s approval.” In other words, forget the provinces and their various demands and conditions. What’s really standing in the way of Northern Gateway is what’s always stood in its way: un-treatied First Nations groups with unextinguished title and full recourse to the courts. A Canadian Energy Strategy, no matter how much it might favor Alberta’s interests, cannot overcome that obstacle.

The Canadian Energy Strategy was the centerpiece of former premier Alison Redford’s diplomatic efforts, and one that she thought could put an end to the strife and gamesmanship that had surrounded key infrastructure projects like the Northern Gateway pipeline. But while it had originally been intended to help expedite the approval of energy infrastructure developments that were of national interest and scope, the Canadian Energy Strategy being discussed this week at the sounds like a much different document. Rather than specific tactics and objectives, it sounds as though it’s been diluted into a broader statement of goals and overarching principles. That’s not necessarily a bad thing, according to CAPP’s Greg Stringham, who says that the strategy could address both the need for the safe and responsible development of Canada’s resources and the desire on the part of people in other parts of the country to get a share of the rewards. “Those are two key questions that we get asked a lot,” he says, “and I suspect that once we see the full report we’ll have a better context in which to address them.” What he’s not looking for, he says, is a one-size-fits-all policy framework. Instead, he’s hopeful that the premiers will emerge from St. John’s with an umbrella of common aspirations and objectives – ones that allow the resource sectors of every province to proceed accordingly. “We might apply it differently in each of our provinces, but we [should] have a commitment to each other that we’re going to use this set of principles to responsibly develop our resources and get them to the markets they need to get to.”

And while the Canadian Energy Strategy almost certainly won’t produce the fast-tracking of energy infrastructure projects that former Premier Redford wanted to see, it might help push past the resistance that’s been holding them up. That’s because it could help to change the perception that Canada is dragging its feet on climate change. But if that’s going to happen, there are going to need to be some meaningful changes to the draft strategy that was leaked earlier in the week. After all, it makes only the vaguest pronouncements about climate change, and while that might have sufficed in 2012, in 2015 it almost certainly won’t. Those changes don’t mean putting a cap on oil sands production, as environmental groups have demanded, but they almost certainly need to include more robust and specific targets for emissions reductions. As such, it’s almost certain to disappoint partisans on both sides of the debate, and those looking to the Canadian Energy Strategy as a silver bullet – either for getting pipelines built or preventing that from happening – aren’t going to like what’s actually in it.

Some, like Saskatchewan Premier Brad Wall, have suggested that any attempts by other provinces to reject key energy infrastructure projects should be rejected out of hand. Perhaps. But that strategy hasn’t worked particularly well, and opposition in Ontario and Quebec continues to build. The ongoing delays of Line 9, not to mention the forthcoming battle in Quebec over Energy East, are a testament to that. Notley, it seems, is more willing to use the tools of diplomacy in order to achieve her objectives, and while that won’t yield the kind of fast-track system that former premier Redford sought when she was pushing for a Canadian Energy Strategy, maybe that’s not such a bad thing in the end.

]]>http://www.albertaoilmagazine.com/2015/07/strategy-session/feed/1An Alberta Carbon Tax and the Fallacy of Supply-side Environmentalismhttp://www.albertaoilmagazine.com/2015/07/the-supply-side-fallacy-carbon-tax-steve-williams/
http://www.albertaoilmagazine.com/2015/07/the-supply-side-fallacy-carbon-tax-steve-williams/#commentsThu, 09 Jul 2015 07:00:33 +0000http://www.albertaoilmagazine.com/?p=36426For years, the energy sector has been getting outflanked by eco-activists. Why a carbon tax could be a way to turn the tables

In journalism, it’s called burying the lede. And for some reason, that’s what just about every journalist who covered the speech by Suncor CEO Steve Williams at an Ecofiscal Commission event in Calgary in May ended up doing. By focusing on the novelty of an energy company CEO stumping for a price on carbon, they missed the real story behind Williams’s message, which was that the energy sector was finally getting ahead of the issue. “If you look at carbon production in a modern economy,” he said, “about 80 per cent of it is at the point of consumption or the point of use. So targeting fees just on industry does not get to it.”

That message was a clear departure from the filibustering that industry had been relying upon in an effort to buy time. But that filibustering isn’t working – just ask anyone who’s involved in trying to get a pipeline approved right now – and time is running out. A broad-based carbon tax that targets both emitters and consumers is a far better option – both in terms of the efficacy of the policy and its direct impact on the oil and gas industry – than some of the other options out there. We all know that markets work, and so it stands to reason that the objective ought to be the creation of the best and most efficient market for carbon.

Williams’s argument that all carbon emissions have to be treated and taxed equally is also an effective shield against the attacks that have been launched against Canada’s energy sector in general and the oil sands in particular. I’ve been describing the thinking behind those attacks as “supply-side environmentalism,” and it’s something that I’ve been banging on about for the better part of a year on Facebook and Twitter conversations and even the occasional face-to-face interaction. The idea that you can meaningfully reduce global emissions by targeting a single source of supply is both self-evidently flawed and intellectually bankrupt – maybe even more so than supply-side economics. And yet, in the absence of a meaningful counter-argument, supply-side environmentalism has generated a much wider following than it otherwise would have.

Now it’s time to start pushing back – hard. The energy sector needs to get behind Williams and his message, and it needs to come out forcefully in favor of a carbon tax that’s applied across the board to both industry and consumers. It needs to take a position of conspicuous leadership, and push an environmental movement that’s been in the offensive zone for years back into their own end – or, at the very least, into the neutral zone. The industry is not going to win this particular game, but it needs to find a way to stop losing so badly. An industry-wide embrace of a carbon tax would go a long way towards achieving that goal.

]]>http://www.albertaoilmagazine.com/2015/07/the-supply-side-fallacy-carbon-tax-steve-williams/feed/1Premier Notley sends a message to the energy sectorhttp://www.albertaoilmagazine.com/2015/07/premier-notley-sends-a-message-to-the-energy-sector/
http://www.albertaoilmagazine.com/2015/07/premier-notley-sends-a-message-to-the-energy-sector/#commentsWed, 08 Jul 2015 21:02:51 +0000http://www.albertaoilmagazine.com/?p=36831Wondering where Alberta's new Premier stands on the oil sands? After Tuesday's speech, you don't have to

]]>When it comes its relationship with the energy sector, it hasn’t exactly the smoothest of starts for Alberta’s new government. But the recent appointments of University of Alberta professor Andrew Leach and ATB Financial president and CEO Dave Mowat as the chairs of the province’s climate change and royalty review panels demonstrated that it was listening to the industry’s concerns. And if there was any doubt left about that, the speech that Premier Rachel Notley gave at the Stampede Investment Forum yesterday should clear those up. She made it clear in no uncertain terms, in front of a crowd that included international investors from 14 different countries, scores of energy industry insiders and eight people from her 11 member cabinet, that she believes in the oil sands and what they have to offer. Indeed, as the Calgary Herald’s Don Braid noted in a column yesterday, the speech was so good that Calgary Economic Development Chairman Steve Allan – a man who’s heard plenty of pro-industry speeches – called it one of the better he’s heard in a long time from an Alberta leader. “It was first-class,” he told Braid. “Couldn’t have been better.”

For those who are curious about the speech’s content, here’s a curated excerpt of what the Premier had to say.

“If there’s one lesson visitors will learn during their stay, it’s that innovation is at the heart of Alberta industry and always has been. This is true of each sector, including forestry, agriculture and manufacturing. But it’s the oil sands that have really emerged as our international showpiece. For more than half a century, Albertans have been coming up with unconventional solutions for an unconventional resource so we can extract, handle and ship it responsibly, to the very best of our abilities. This attitude of pushing the limits of what’s possible influences every aspect of the oil sands, from research and development to environmental management to the service and support fields.

It’s a tremendous asset which has transformed Alberta into one of the world’s leading oil producers. And I’m here today to emphasize that the province has a government determined to defend this advantage, by being constructive at home, and by building relationships around the world. I understand that people are uncertain after the last election. Whether you’re an Albertan or a long-time Alberta watcher, change at the top after so long can seem difficult. But we are working hard to make the transition as smooth as possible, and bring as much economic stability as we can, while we implement our plans. Those plans center on living up to our promise to grow prosperity and create good jobs and conditions that benefit every Albertan. We know there is only one way to succeed. And that’s by supporting a free, open, sustainable and increasingly diversified economy. However, we can’t accomplish this on our own. Job creators create jobs in the private sector, not government. And we will be honest, thoughtful partners to them.

We will maintain a warm welcome for investors and uphold their right to earn fair returns. So Alberta will continue to be a healthy place for private investment under our government. This definitely applies to energy. Expanding existing oil sands projects, establishing new ones and pioneering advanced technologies — all this requires spending on a large scale. Under our leadership, Alberta’s abundant oil and gas reserves will remain wide open to investment. We will maintain one of the most competitive tax systems in Canada. Our government will boost exports by seeking out new relationships, strengthening old ones and enhancing Alberta’s environmental record. And we will be consultative and prudent in how we take the province in a different direction.

When it comes to potential shifts, such as greenhouse gas emissions and royalties, no one will be surprised by how our decisions unfold. Change will come after consultations led by some of Alberta’s best minds, with all those who stand to be affected. They will have every opportunity to share their perspectives. There is so much riding on those decisions: the jobs that families depend on, the natural beauty surrounding us, and the inheritance we leave to our kids that government must get them right. A confident industry, secure in the value of its investments, is vital to this process. After all, the energy sector needs stability to keep Albertans employed and to innovate as it confronts climate change. And I will not forget it.”

Time will tell whether Premier Notley’s deeds on this file measure up to her rhetoric. But for the time being, at least, hers is a speech that ought to have all but the most ideologically blinkered in the energy sector saying “Yahoo!”

Here it is, your Energy Ink podcast for June 2015. Alberta Oil magazine editors Max Fawcett and Todd Coyne are back with host Jim Kerr to discuss the June issue, the latest in energy news and “The 200” list of Canada’s biggest oil and gas producers, midstreamers and service companies.

]]>http://www.albertaoilmagazine.com/2015/06/the-energy-ink-podcast-episode-7/feed/0Parsing the Dutch decisionhttp://www.albertaoilmagazine.com/2015/06/parsing-the-dutch-decision/
http://www.albertaoilmagazine.com/2015/06/parsing-the-dutch-decision/#commentsFri, 26 Jun 2015 14:13:52 +0000http://www.albertaoilmagazine.com/?p=36731A court in the Netherlands ruled that its government must act more decisively on climate change. Does that set a precedent for other jurisdictions - including Canada?

It’s a legal decision whose implications extend far beyond the courtroom where it was delivered – and one that has environmentalists around the world celebrating an unlikely and unexpected victory. On Wednesday, the Hague District Court in the Netherlands ordered the Dutch government to reduce greenhouse gas emissions by at least 25 percent from 1990 levels by 2020. That’s some distance from the 17 per cent it’s already committed to, although it’s even further from the 40 per cent reduction that Urgenda, a Dutch environmental group and the case’s plaintiff, was seeking when it sued the government. Still, it’s a shocking win, and one that climate activists around the world looking hard at the feasibility of pursuing similar cases in their own countries. According to the court, “the possibility of damages for those whose interests Urgenda represents, including current and future generations of Dutch nationals, is so great and concrete that given its duty of care, the state must make an adequate contribution, greater than its current contribution, to prevent hazardous climate change.”

James Coleman, an energy law professor at the University of Calgary, thinks it’s a virtual certainty that the case will make its way to a Canadian courtroom at some point in the future. “It will undoubtedly be a precedent that’s cited,” he says. “Whether it’s a precedent that actually wins cases seems much more doubtful.” That’s because the decision effectively gives policy direction to the Dutch government, and it’s a line that Coleman thinks Canadian and American courts will be more reticent to cross. “The court here emphasized that it was leaving the decision of how to meet the goal that it was mandating to the government, and that it wasn’t intruding on government responsibilities. But that, I think, is a pretty bold statement. It takes a lot of chutzpah and I’m not sure you’d see that from a court in Canada or the United States.”

He cites the example of Friends of the Earth’s attempt to sue the Canadian government in 2007 after it failed to meet its obligations under the terms of the Kyoto Protocol. The federal court dismissed the case in 2008, noting that it was beyond the court’s purview to determine whether the government’s failure to live up to the commitments made in the Kyoto Protocol, which its predecessor signed onto in 1997, constituted a breach of the law. “Such an order would be so devoid of meaningful content and the nature of any response to it so legally intangible that the exercise would be meaningless in practical terms,” Justice Robert Barnes wrote in his decision. The Supreme Court of Canada, meanwhile, declined to hear an appeal of the decision in 2010. “The court basically said ‘if you want a remedy, go to parliament,’” Coleman says. “That’s much more often the attitude of courts in Canada and the U.S. – and may be the attitude of the Dutch courts on appeal.”

Time will tell whether the Dutch government decides to appeal the case. Urgenda, for its part, is doing everything it can to talk the government out of an appeal, something that Coleman thinks might speak to the likelihood of it being overturned. “If you have a good decision,” he says, “you don’t want it to be appealed.” That said, even if a higher court in the Netherlands upheld the ruling it’s not clear that it would be the lead domino that sets a cascade of similar decisions into motion in other jurisdictions. But, Coleman says, that doesn’t mean people won’t try to use it that way. “You could employ a lot of these arguments if you found a legal hook, some kind of existing statute, to put it on. It will be an important precedent. I just don’t think it will apply in a simple or one-to-one way – or produce a similar result in Canada.”

]]>http://www.albertaoilmagazine.com/2015/06/parsing-the-dutch-decision/feed/0Why the moral case for fossil fuels isn’t one we should makehttp://www.albertaoilmagazine.com/2015/06/why-the-moral-case-for-fossil-fuels-isnt-one-we-should-make/
http://www.albertaoilmagazine.com/2015/06/why-the-moral-case-for-fossil-fuels-isnt-one-we-should-make/#commentsWed, 24 Jun 2015 15:59:55 +0000http://www.albertaoilmagazine.com/?p=36581Alex Epstein's ideas found a receptive audience in Calgary last week. Here's why you shouldn't be a part of it

In journalism, we like to tell ourselves that our job is to comfort the afflicted and afflict the comfortable. But Calgary Herald columnist Deborah Yedlin turned that aphorism on its head in a recent piece covering the appearance last Tuesday by Alex Epstein, the author of The Moral Case for Fossil Fuels and founder and president of the Center for Industrial Progress. Epstein’s argument is that the negatives associated with fossil fuel use – and more on that in a moment – are vastly outweighed by the positives. “If you want to improve the lives of the poor, for the last 30 years and 300 years we have seen one consistent truth, which is you industrialize and you do it using the cheapest and most reliable energy you can get, which is fossil fuels,” Epstein told an audience at the Palliser Hotel. “Saying you can get to cure poverty by getting rid of fossil fuels is like saying you want to prevent polio by getting rid of vaccines.” Yedlin backstopped Epstein’s case in her column, arguing that “whether it’s the papal encyclical, the G7 agreement or the non-governmental organizations that protest against the oil sands, the more realistic challenge is that the world needs to be more efficient, invest in more energy sources and find ways to change the energy mix so less carbon is emitted. Eliminating fossil fuels is not only unrealistic but bound to cause myriad unintended, negative consequences. The road to hell, as they say, is paved with good intentions.”

Perhaps. But the road to hell is also paved with self-delusion and false hope, and to my mind those are Alex Epstein’s stock in trade. I understand the desire to want to push back against the arguments being made by environmental activists, many of which are utterly divorced from economic, environmental and social realities and most of which are put forth by people who are actively and unapologetically antagonistic towards the energy sector’s interests. That’s why so many people rushed to embrace Ethical Oilwhen it first came out – for once, they could stand tall and proud and push back against the increasingly hysterical criticism to which they’d been subjected. Nobody wants to be told that what they do for a living is killing the planet, and Ezra Levant’s book, however crude it might have been, offered them a coherent counterargument. And while both Epstein’s argument and the person making it are more polished than Ethical Oil was, it’s cut from the same cloth.

But let’s not fool ourselves here, folks: Epstein is selling a product, not offering a solution. And the product that Epstein is selling is the intellectual equivalent of ice cream. Yes, his brand of intellectual ice cream has better ingredients and more attractive packaging than the one Levant was pitching, but it’s still ice cream – and it’s still completely devoid of any nutritional value. Epstein’s arguments aren’t going to convince anyone who wasn’t already on board with fossil fuels to begin with, and if anything they’re likely to polarize people who are still willing to hear both sides. He may be a sophisticated pitchman, but he’s still stumping for ideas that are more focused on reassuring people than winning them over. For example, the notion that coal represents “one of the cleanest sources of energy in history,” as he told the hosts of The Energy Gang podcast in a recent interview, is self-evidently untrue – unless by “one of” he meant “one of a very, very long list.” His views on climate change, while skillfully presented and carefully couched in the language of scientific skepticism, is equally problematic when it comes to using his book and his arguments as a means to advance the energy sector’s interests in the ongoing debate.

The case that Epstein makes in The Moral Case for Fossil Fuels isn’t necessarily a bad one, and the rhetorical skills that he routinely displays in presenting it are admirable. But where that case falls down – in my view, anyways – is in the fact that it’s fundamentally backward-looking. I suspect that’s by design given that the case against renewables, the source of energy that fossil fuels will be competing against in the future, looks a lot stronger in the past. That said, his is the definition of a rearguard action, and rearguard actions are by their very nature more concerned with preventing further losses than actually reversing them, and the energy sector needs to find ways to win. Epstein’s argument won’t help Canada get its energy products to market any more quickly. It won’t convince any of its critics that it’s acting in good faith and in compliance with existing rules and regulations. And it won’t turn the tide of public opinion that continues to advance on Alberta’s borders. What it does is make people in the energy sector feel better about what they do and why they do it. There’s value in that, I suppose, but only inasmuch as we identify it accordingly. It’s not a game plan. It’s not a way forward. It’s a bowl of ice cream – and an expensive one at that.

Postscript: In the spirit of full disclosure, I should say that I found The Moral Case for Fossil Fuels intriguing enough to reach out to him back in April and ask him to write something for the back page of our magazine. I’m a big fan of stirring the pot from time to time, and I thought the broad strokes of his argument more than met that standard. I wrote to him and suggested that he might want to write something about the forthcoming climate change negotiations that will culminate in Paris at the end of the year and how his ideas ought to inform them. His response put an end to that correspondence, and it underscores what I think is the biggest weakness in his argument. “The main way the moral case should inform those negotiations,” he said, “is to get them canceled and get countries focused on human life and human progress, including the mastery of climate through development.” The energy sector can no longer afford to be seen as obstructing progress on climate change. It must inform that progress, and, if it’s particularly ambitious, help shape and guide it. The rearguard battle that Epstein seems to want to fight achieves none of those goals.

]]>http://www.albertaoilmagazine.com/2015/06/why-the-moral-case-for-fossil-fuels-isnt-one-we-should-make/feed/1Saudi Arabia doubles downhttp://www.albertaoilmagazine.com/2015/06/saudi-arabia-doubles-down/
http://www.albertaoilmagazine.com/2015/06/saudi-arabia-doubles-down/#commentsMon, 22 Jun 2015 20:55:53 +0000http://www.albertaoilmagazine.com/?p=36548Citigroup thinks the Saudis are trying to push out as much oil as they possibly can right now - but why?

]]>The House of Saud, it seems, has only just begun to fight. At least, that’s the read from Citigroup, which is predicting that Saudi Arabia will continue to push its production as close to its estimated capacity of 11 million barrels per day in the second half of this year. “The clear implication of Saudi Arabia’s new oil policy of pressuring high-cost producers is for them to increase production and exports,” Seth Kleinman wrote in an e-mail to Bloomberg on June 15. “With an increasingly compelling picture of lower oil prices over the next 10 to 20 years, it makes sense for Saudi to use it all and use it now.”

Citigroup isn’t alone in making that call, either. “If you are Saudi Arabia and you’re looking at the new oil order we live in, you would go to full capacity,” Jeff Currie, head of commodities research at Goldman Sachs in New York, told Bloomberg in a June 15 email of his own. And according to rig data gathered by Baker Hughes that’s exactly what they’re doing, given that the number of oil rights rose to 81 in April, the highest number recorded since it started keeping track 20 years ago. But this push by the Saudis to produce as much oil and they possibly can isn’t driven strictly by its desire to drive out those high-cost producers and seize market share for itself. It’s also informed by the belief – or, at the very least, the possibility – that global demand for oil is in the process of peaking. As Bloomberg noted, “the lower outlook for prices ‘turns oil in the ground in Saudi from an appreciating resource into a depreciating resource,’ said Citigroup’s Kleinman. ‘If it’s depreciating, you produce it all as fast as you can.’”

Not everyone buys that strategic calculus, though. A recent report from the Oxford Institute of Energy Studies noted that “OPEC would derive no advantage from flooding the oil market, even if all announced climate change policies were fully implemented, since its own net revenues would decrease in such an event.” And while OPEC obviously includes producing nations other than Saudi Arabia, it stands to reason that what’s good for the former is good for the latter – and vice-versa – given how much of OPEC’s production Saudi Arabia accounts for. Still, as a May piece in Bloomberg Markets noted, Saudi Arabia could be trying to drive the price of crude down in order to delay the transition away from it, discourage the development of alternative sources of energy and keep the world hooked on oil for as long as it can – at the very least, long enough for the Kingdom itself to transition its economy away from it. “[Ali al] Naimi and other Saudi leaders have worried for years that climate change and high crude prices will boost energy efficiency, encourage renewables, and accelerate a switch to alternative fuels such as natural gas, especially in the emerging markets that they count on for growth. They see how demand for the commodity that’s created the kingdom’s enormous wealth – and is still abundant beneath the desert sands—may be nearing its peak.”

If it is, that has enormous implications for everyone in the business of producing that commodity. And it almost certainly means that the war between OPEC and North American shale producers – and, by extension, Canadian oil companies – isn’t anywhere near to being over. Indeed, it may have only just started.

]]>http://www.albertaoilmagazine.com/2015/06/saudi-arabia-doubles-down/feed/3The sum of all fearshttp://www.albertaoilmagazine.com/2015/06/the-sum-of-all-fears/
http://www.albertaoilmagazine.com/2015/06/the-sum-of-all-fears/#commentsThu, 18 Jun 2015 14:57:29 +0000http://www.albertaoilmagazine.com/?p=36316The appointment of Marg McCuaig-Boyd as Alberta's new energy minister was a yellow flag for industry when it came to how the NDP would address their concerns. But her new chief of staff is a red flag - and a big one, too

]]>When Marg McCuaig-Boyd made her way to the podium on Tuesday evening to give the keynote address at the 2015 Global Petroleum Show, you could tell that she was nervous. But most of the people in the audience were probably just as nervous as the province’s newly minted energy minister. After all, they were hearing for the first time from someone with no actual experience in the energy sector, and who was representing a government that had long taken an adversarial approach to an industry that was already up to its neck in adversity. “There’s no denying that change at the top after so long is challenging,” McCuaig-Boyd said in an awkward five minute speech during which she barely looked up from her notes. “But we are working hard to make the transition as smooth as possible.”

Well, so much for that.

Yesterday, news leaked out that Graham Mitchell had been appointed as McCuaig-Boyd’s chief of staff. For those who don’t know him – which is to say, virtually everyone in Alberta – he’s a Toronto resident whose credentials include a Master’s of Environmental Studies from York University, a stint as Jack Layton’s executive assistant and a turn at the left-wing Broadbent Institute as its director of training and leadership. But if that sounds like an odd background for someone who’s going to advise Alberta’s minister of energy, it’s nothing compared to his association with LeadNow, an environmental lobby group that’s actively and aggressively opposed to Canada’s energy sector and its ambitions. He was the group’s executive director until a few days ago, and a registered lobbyist on its behalf since January 29th whose issues include “asking that the Conservative federal MPs in B.C. pressure cabinet to stop the Enbridge Northern Gateway Pipeline” and “requesting that the National Energy Board take into account climate science and open up hearings to the general public during the Energy East pipeline review process.”

It’s one thing to have a minister who’s unfamiliar with the energy sector and its key files, but quite another to have someone advising her whose background suggests that his advice will be informed by a bias against energy. And while it’s theoretically possible that he’ll leave that anti-energy background in the past (in the same way that it’s theoretically possible that the Toronto Maple Leafs could win the Stanley Cup in 2016) nobody outside of a clutch of die-hard partisans believes that’s actually going to happen. His appointment, meanwhile, confirms the biases that people in the energy sector had about the NDP, and makes the already shaky relationship between the two even more tenuous. Nobody seriously expected that the NDP and the energy sector would get along that well, but there was hope that they’d be able to find a productive middle ground. In the days after the May election Premier Notley appeared to try to calm nerves by saying that she looked forward to working with the energy sector. And as McCuaig-Boyd said in her Tuesday speech, “This government will be an honest and thoughtful partner for the energy sector as we move forward.” But those were words, and they don’t square with the decision to appoint Mr. Mitchell as her chief of staff. That’s a decision that falls squarely in the lap of Premier Notley, too. Indeed, McCuaig-Boyd left no doubt about that when she told reporters yesterday that the appointment of Mitchell had come straight from the Premier’s office and that she’d only known him “for a few days.”

The decision to parachute Mr. Mitchell into McCuaig-Boyd’s office can have only one of two explanations: either Rachel Notley and her key advisers don’t understand the energy sector’s perspective or they don’t care to understand it. Both are a stark contrast to the message being delivered by Saskatchewan’s own minister of energy, Bill Boyd, who was in Calgary during the Global Petroleum Show telling everyone he could find that things looked much better on his side of the border. A few high-profile CEOs have already mooted the possibility of shifting capital out of Alberta and into Saskatchewan, and while it just so happened that most of their assets were already outside of Alberta it’s a conversation that’s surely taking place in the boardrooms of companies that can choose to move their money east. McCuaig-Boyd’s underwhelming speech, and the news that her chief of staff is antagonistic towards the energy sector’s interests, will only serve to crank up the volume – and maybe the urgency – on those conversations.

Sure, Premier Notley could try to call their bluff. It’s safe to assume that Mr. Mitchell would be among those who would approve of such a decision. But that’s a dangerous road to travel, given that the NDP will need the energy sector’s help – and its tax and royalty dollars – if it wants to fulfill the spending promises it made to Albertans during the election. Ultimately, it’s up to the Premier to fix this situation before it fatally poisons a relationship that both sides need to keep alive. The best way to do that is by reassigning Mr. Mitchell into a portfolio where his views aren’t so clearly at odds with the interests of his minister’s constituency. And if she doesn’t? Well, it’s going to be a long four years – for both sides.

]]>http://www.albertaoilmagazine.com/2015/06/the-sum-of-all-fears/feed/2Alberta Oil at #GPS15: 3 Questions for Katch Kanhttp://www.albertaoilmagazine.com/2015/06/alberta-oil-at-gps15-3-questions-for-katch-kan/
http://www.albertaoilmagazine.com/2015/06/alberta-oil-at-gps15-3-questions-for-katch-kan/#commentsSat, 13 Jun 2015 20:52:48 +0000http://www.albertaoilmagazine.com/?p=36336A 20-year-old company hopes it can win back some of the market share it has lost since oil prices fell

When they trip the pipe all that fluid in the drill pipe needs to go somewhere. So it falls through the rig floor and gets collected in our Katch Kan. And once it’s captured in our Katch Kan, it’s taken and recycled back to the shakers or the holding tank. So it never touches the floors and never contaminates the environment around us. This saves the rig between $3,000 to $4,000 per day in drilling costs, because once it touches anything it’s contaminated.

How widely used is this equipment?

Before the fall in oil prices, we had our equipment installed on 80 per cent of active rigs in Canada. That has since dropped because one of the first things that companies cut is extra contracted equipment on the rigs. The rumor in the field is that once we reach $65 they’ll start sending more steel back out in the field, getting more rigs active.

How did the company get started?

Our CEO [Quinn Holtby] actually started as a roughneck. As a roughneck he could see the injuries that were happening, and he committed his life to saving and protecting the rig hands up on the floor. And that’s why we have this system.

Have you ever worked on the rigs?

I go out on the rigs, yes. I’ve partnered with companies working on the rigs and installing the equipment. So I’ve been under the rig floor covered in invert while they’re tripping pipe and it’s spraying all over the place. So I’ve had my fair share of drilling mud baths, for sure. But that’s part of the fun of the job though.

It’s all hands free. You can stand up and rig up the entire rig. With two or three guys on site you can rig it all up hydraulically. No one’s ever touching any drill pipe. So while you’re rigging it up you don’t have to pull out any hammers or pins. It’s 200,000 pounds pullback so it’s pretty good for these horizontal wells. We’ve actually been drilling a lot of wells at 45 degree angles rather than drilling straight down. We’ve drilled a few wells that way recently.

What’s the difference in time for rig-up compared to other rigs?

It’s huge. The three guys who brought this rig in here were rigged up in like 2.5 hours.

Do you see a lot of these rigs in the field these days?

Nowadays most rigs have hydraulic systems like this. This one is a little more leading-edge because you’re never picking up drill pipe that isn’t screwed into the top drive. It’s just a lot safer. And there’s no chance of dropping the pipe out of the pipe arm. Sometimes you’ll see mistakes made when rig workers have to piece together the pipe, and that’s how injuries happen.

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As the kids say, shots fired. Wednesday morning, during the Energy Leaders Breakfast at the Hyatt in Calgary, Saskatchewan Minister of Energy Bill Boyd sent a message to Alberta’s new NDP government in pitching his province’s credentials as an investment-friendly jurisdiction. “We have a stable oil royalty regime in Saskatchewan,” Boyd said, “and we think that’s very important.” That’s why Alberta Oil editor Max Fawcett tracked Boyd down at the Global Petroleum Show in order to follow up on those remarks and ask him about the prospect of a new federal government, the Saskatchewan advantage and how his own government feels about a price on carbon.

]]>http://www.albertaoilmagazine.com/2015/06/alberta-oil-at-gps15-a-conversation-with-bill-boyd/feed/0Alberta Oil at #GPS15: 3 Questions for Manluk Global Manufacturing Solutionshttp://www.albertaoilmagazine.com/2015/06/alberta-oil-at-gps15-3-questions-for-manluk-global-manufacturing-solutions/
http://www.albertaoilmagazine.com/2015/06/alberta-oil-at-gps15-3-questions-for-manluk-global-manufacturing-solutions/#commentsFri, 12 Jun 2015 15:46:36 +0000http://www.albertaoilmagazine.com/?p=36318A Wetaskiwin-based company is one of very few in North America to manufacture its products using fully autonomous robotics

Not all of it. We also have over 50 CNC machines and other equipment. But we’ve begun investing in robotics to cut costs. An example is we used to manufacture a product that fits into the valve components we make. We made thousands of them, until all of sudden we weren’t getting orders – we found out [our clients] were going to China to have them made. So we did some digging and found what [our clients] were being charged for the part, and figured out the costs involved with building them using robots. We’ve since got back all the business back from our Chinese competitors.

It’s cheaper because you don’t need the high-end labor that a machinist would bring. You only need a programmer to tell it what to do. So you might need one machinist to help program the machine, and then one programmer to program the robot. Then you just need a guy who needs little experience to pick up the end product and package it up. So instead of 12 machinists you only need one machinist, one programmer and then a few guys who basically just push buttons.

What is the cost of installing these autonomous machines?

We’re just putting in a new robot right now, and with all of the parts that needed to go with it, it cost just over $400,000. If you can keep the robot busy, it’s not that big of an investment. The actual robot itself is fairly cheap, I’m told. It’s the controllers and compressors and everything else that adds up.

Have you seen your orders slow as companies pull back their expenditures?

It’s not too bad. Basically we used to have a five-month wait time for orders. Now we’re back to about one-month wait times. So we’re keeping the doors open.

Apoorv Sinha’s clean-tech startup, Carbon Upcycling Technologies, has come up with a process to convert CO2 emissions into graphene for use in the cement and coatings industries. “We believe that they’re high-volume industries where we’ll create a lot of a dent on the CO2 emissions side of things,” Sinha says.

“So far, clean-tech emissions and market-specific problems have been looked at as separate issues, but they’ve never been combined,” Sinha explains. “There’s a lot of people converting CO2 back into methane, natural gas, polyethylene” but that’s a cost-intensive process and isn’t for everyone.

“We came up with a mechanical process that within a year we’ve been able scale up quite a bit and is still carbon negative, and it’s capturing CO2 emissions. So it’s kind of solving both problems at some level,” Sinha says. In addition to being “genuinely green,” Sinha says the technology could also solve a real market problem. Within six to nine months – if the testing data is as good as Sinha thinks it could be – Carbon Upcycling’s technologies could be going into high volume markets, for things like factories and skyscrapers, for example. “Those are the things that are now going to have this material added on, become a lot greener, become a lot more durable; instead of lasting 40 to 50 years, they’re going to last an extra 30 to 40 years,” Sinha says.

]]>http://www.albertaoilmagazine.com/2015/06/alberta-oil-at-gps15-catching-up-with-carbon-upcycling-technologies/feed/0Alberta Oil at #GPS15: Four Questions for Jody Hill of RecyClean Serviceshttp://www.albertaoilmagazine.com/2015/06/alberta-oil-at-gps15-four-questions-for-jody-hill-of-recyclean-services/
http://www.albertaoilmagazine.com/2015/06/alberta-oil-at-gps15-four-questions-for-jody-hill-of-recyclean-services/#commentsThu, 11 Jun 2015 18:46:13 +0000http://www.albertaoilmagazine.com/?p=36290A company that offers a mobile frack water system is trying to increase its presence in the Canadian market

Up to about 75 per cent of all the water that’s used can flow back. So all of the millions of gallons of water that are pumped downhole to frack a well, a good percentage of that is going to end up flowing back. So it really makes sense to conserve our water that we have and also reduce the risk of contamination by disposal wells or transportation to and from disposal wells. It just makes sense. We can recycle that water more cost effectively than you can procure it, truck it, truck it again, and then dispose of it.

How does demand in Canada compare to other markets you’re in? Does water availability here play into that at all?

I know you have a lot more available water here than in lots of the U.S., but I think people are beginning to realize that if you just keep using and using and using without putting any water back, I think it’s becoming an area of concern. I know in certain parts of the States they’re really starting to come down on how much water is being used and how it’s being disposed of. In the Marcellus for instance, they’re not issuing any new disposal well permits, and so water coming out of the process there has to be trucked into Ohio into a disposal well.

Do these hydro-pods require a lot of know-how to operate?

They’re actually very simple to operate. I’m actually a certified hydro-pod operator – and I’m in marketing (laughs). I have no oilfield engineering experience or chemical engineering experience or anything else. Anyone could be trained to operate one of these safely and efficiently. It’s all monitored through a SCADA system. We’re going to process about three barrels per minute. I asked to become an operator myself, because the better I understand it, the better I can sell it.

So you could operate this technology out in the field?

I could, but it’s been a few years since I did it. When I did my training it was sitting in a facility – it wasn’t hooked up to a tank or anything. But we had real frack water. I had actual produced water – really nasty black stuff – and by God I cleaned it. Yes I did. On day two of the training I said can I please do that again because I think I know a few little tweaks in the process to get better results. And I got better results the second time. They didn’t expect anything out of me coming in, because I’m not oilfield, I’m marketing, but I was top of my class.

Jupiter Hydro is a Calgary-based company with the goal of becoming a world leader in efficient in-stream water power technologies that emit no greenhouse gases. Ross Sinclaire is the company’s CEO and founder, and is also the inventor of the technology. “We’re developing a hydro-kinetic technology that makes power from rivers and tides and spillways and canals,” Sinclaire says, adding that Jupiter already has patents in 60 countries.

“We’re just in the place where we’re going out to deploy this all over the world,” he says. The company differs from its competitors in many ways, including through its unique and affordable product design. According to the company, the renewable power generation industry is often stuck when it comes to delivering viable hydro-kinetic power due to high-cost design concepts.

Sinclaire says his company is also unique in that, where most similar technologies use a submerged generator, his generator is up top instead of in the water. “We’re fish friendly, we’re debris friendly; the debris rolls right through where it might damage other turbines,” Sinclaire says. What’s more, the company aims to make power on the cheap. “We’re quite convinced we can make power properly for 10 cents [per kilowatt hour],” Sinclaire says.

Zayfti was announced as the winner of the daily doghouse pitch competition at the 2015 Global Petroleum Show on Wednesday in Calgary.

Karl Gartly’s goal with Zayfti is to simplify and digitize paperwork in the field, resulting in companies increasing their operational efficiencies and reducing errors. Founded in 2013, Gartly explains this mobile-first application is “semi-automating the ability of companies to render field-based paperwork back to the office in real time.”

This is achieved through providing the companies with a real time operational picture of who’s onsite and what’s onsite.

According to Gartly, mobile-first technology is slightly difficult to adopt in the oil patch due to old school mentalities around where mobile devices are and aren’t allowed. “The fact is, this technology is more efficient,” he says, adding that Zayfti has the ability to draw all data required by the head office from the field.

“The mobile first capabilities are going to be embraced by the new worker,” Gartly says. As many new workers are used to doing everything on their phone, the time to train them on these technologies is minimal, he says. “As the companies realize how well they can track things with this technology, there won’t be an option to make the choice. In particular, with oil prices where they’re at today, the need for efficiency is extremely high and by replacing what used to cost you $3,500 to track and today can cost you $400, they’re almost forced into the corner to making a change,” Gartly says. “I’m just trying to change the oil patch.”

]]>http://www.albertaoilmagazine.com/2015/06/alberta-oil-at-gps15-daily-doghouse-pitch-winner-zayfti/feed/0Alberta Oil at #GPS15: Three questions for Black Gold Rush Industrieshttp://www.albertaoilmagazine.com/2015/06/alberta-oil-at-gps15-three-questions-for-black-gold-rush-industries/
http://www.albertaoilmagazine.com/2015/06/alberta-oil-at-gps15-three-questions-for-black-gold-rush-industries/#commentsWed, 10 Jun 2015 20:20:38 +0000http://www.albertaoilmagazine.com/?p=36253Black Gold Rush Industries’ combustors can burn off gases, and operate entirely without the need for fuel gas. The company is banking on stiffer emissions regulations in Alberta to enter the province’s oil market

Dallas Rosevear, business development manager at Black Gold Rush Industries

What makes your company’s combustors useful to producers?

The advantage is the heavy oil sites in northeastern Alberta have typically just vented gases into the atmosphere because it’s not cost effective to capture such a small volume of gas. That is a large [recent] focus for the AER is regulating those emissions in that region. These are going to provide companies with one way to efficiently handle those emissions. You could run a pipeline and run [those gases] down a pipeline if the economics are there. But these are self-sufficient because they don’t require any fuel gas to run the burner. The ignition system is also solar powered, though we always suggest companies run a small feed into them just in case. Another big thing is that land owners and residents don’t like seeing the flares. You don’t see the flame with these flares because the flame is enclosed inside.

So AER regulations currently aren’t as strict as EPA regulations in flares gas emissions?

Not yet. But it could be coming [current legislation falls under the AER’s Directive 60]. I think the AER is really focused on reducing venting and fugitive emissions. Until recently there hasn’t been any thing that could effectively do it. Now that there are effective ways, they’re looking at enforcing it. In a typical incinerator you would need a constant flow of fuel gas keeping the temperature at 600C. We don’t require any fuel gas because of this burner system. With these we can reach that 99.9 per cent threshold while operating at a very low psi.

Are these combustors currently installed in any other markets?

We probably have 250 installed across West Texas, because tighter regulations are in place in the U.S. for storage venting. They don’t allow anything over, I believe, six tonnes of emissions per year. So these combustors are well known down there. We have about half a dozen installed in Alberta right now. But we think northeastern Alberta is really going to take off once tighter regulations are put in place. We are working with a company up here that does want to install two new units. Everyone is always afraid to be the first.

In a world of triple-digit oil prices, getting those extra few barrels separated out from produced water wasn’t a priority for a lot of companies. But with WCS trading at half that level, it’s suddenly become urgent – and on Tuesday an innovative startup pitched a potential solution to their problem. Dynasonic Nano-Emulsion Breaking won Tuesday’s Doghouse Pitch Competition, and it’s no wonder – it can separate oil from produced water with an efficiency that existing methods can’t match. “When I saw the Dynasonic Nano-Emulsion Breaker I jumped in with both feet,” says Maggie Hanna, the company’s VP of innovation and technology and a woman who’s built a career finding and developing promising new ideas. “I’ve seen a lot of tech, and it’s the best I’ve ever seen.”

What’s so impressive about Dynasonic’s tech? “You can take any mixture of oil and water, from 100 per cent water to 100 per cent oil, put it through our machine one time and you’ll get pure oil and clear water – every time,” Hanna says. “That water is down to 2.6 PPM residual oil content, which is better than anybody else can do. And that oil is 200 PPM water, so it’s pure oil. That takes the oil that’s in the disposal water and puts it into the revenue stream, and it makes clear water that can go down the disposal hole. If you’re not putting oil down a disposal well, that disposal well needs way less maintenance, fewer workovers and it lasts way longer.”

What about the economics? After all, there are plenty of great ideas that fall flat when it comes time to talk about costs. Not Dynasonic, though. Hanna says that they rent the unit out for $500 a day, and at a recent site they used it to process water that had already been run through the existing suite of methods. “All the oil that they can take out they had taken out. And we took out an extra 44 barrels per day. At $50 oil, that’s $2,500 – and minus the rental fee of $500 a day, that’s $2,000 of extra revenue that goes into that producer’s pocket.”

The company currently has three different models that it’s testing, but it’s settled on commercializing its mid-sized one, a one-meter by three-meter unit that can be pulled behind a three-quarter tonne truck and is capable of processing between between 30 and 8,400 barrels of fluid per day. “Some other companies have called it a tanker toy,” Hanna says, “but then we kick their butts.”

Dynasonic is also working with Alberta Innovates: Tech Futures on a model that would be applicable to SAGD operations and could theoretically process up to 180,000 barrels of fluid a day. “We could replace a whole lot of their surface pots and pans that they use to clean that water from produced water to boiler feed,” Hanna says. “Boilers are finicky – they scale easily, so you have to do a bunch of things to the water. If you put the emulsion, at temperature, through our unit, you can eliminate a lot of that surface equipment.”

Given its apparent technical advantages and cost benefits, what’s standing in the way of wider adoption of Dynasonic’s technology? “There’s an inertia of the accepted way of doing things,” Hanna says. “That’s our biggest competitor, actually.”

]]>http://www.albertaoilmagazine.com/2015/06/alberta-oil-at-gps15-doghouse-pitch-winner-dynasonic-nano-emulsion-breaking/feed/0Change is in the air in Alberta – and the energy industry doesn’t need to fear ithttp://www.albertaoilmagazine.com/2015/06/energy-industry-shouldnt-fear-change/
http://www.albertaoilmagazine.com/2015/06/energy-industry-shouldnt-fear-change/#commentsWed, 03 Jun 2015 07:00:45 +0000http://www.albertaoilmagazine.com/?p=35871Why the new NDP government isn't necessarily the disaster that some are suggesting it will be

“Better the devil you know than the devil you don’t.” It’s a phrase that, for all the corruption, mismanagement and outright incompetence that the Progressive Conservative government displayed in recent years, probably best captures the attitude that voters from the energy sector had towards the party that had governed Alberta for more than four decades. And when they discovered that the NDP had, in fact, swept the PC dynasty out of office, they certainly seemed to be bracing themselves for a hellish environment.

That’s understandable. The NDP has long made hay with its opposition to the energy sector, and its ranks are flush with people who neither understand the industry and the contributions it makes to this country’s economy nor care to. Its caucus is filled with people who lack both experience governing and connections to the energy sector, a combination that’s effectively the inverse of what the Progressive Conservatives brought to the table. Previous provincial NDP governments, meanwhile, have a decidedly underwhelming track record when it comes to working with the private sector and creating the ­conditions for ­economic growth. All of this, combined with Rachel Notley’s pledge to raise ­corporate taxes and embark upon a royalty review, was enough to get more than a few energy executives to openly muse about the prospect of diverting their capital outside the province or even taking their head office along with it.

But let’s be honest, folks. The devil we knew so well hadn’t exactly been treating the energy sector particularly well of late. Yes, former premiers Prentice and Redford lobbied aggressively on behalf of the various pipeline projects we all know need to get built, but what did they have to show for those efforts? Didn’t their waffling on the province’s approach to managing its carbon emissions allow the energy sector’s opponents – and ­enemies – to paint it as a pariah? Wasn’t it Alberta’s Progressive Conservatives who failed to communicate to their federal counterparts the damage that changing the rules on how income trusts were taxed and treated would do to the energy sector? And wasn’t the last royalty review, the one that promised to deliver “our fair share” to Albertans, conducted by a Progressive Conservative Premier?

I’m not suggesting that Premier Notley’s win is good for the energy sector. But I’m not sure it’s going to be as bad as people think, either, and there’s a pretty compelling case that she could be a better advocate for new pipelines than either Jim Prentice or Alison Redford ever were. Given the billions of dollars that the widening differential between WTI and WCS has cost both energy companies and the provincial treasury in recent years, I think there’s some common ground there. No, change isn’t always fun, and it isn’t always easy. But sometimes, change is necessary.

Speaking of which, we’ve changed our annual ranking of Canada’s biggest energy producers and service companies. We decided to roll them into one comprehensive list, expand the list to include 200 names – including midstream and pipeline companies – and single out the year’s top oil producer, the top gas producer, the top midstream company and the top service company. Yes, it’s a lot of changes, but change is something we’re all going to have to get used to in the weeks and months to come.

]]>http://www.albertaoilmagazine.com/2015/06/energy-industry-shouldnt-fear-change/feed/0Law and disorderhttp://www.albertaoilmagazine.com/2015/06/law-and-disorder/
http://www.albertaoilmagazine.com/2015/06/law-and-disorder/#commentsTue, 02 Jun 2015 17:38:44 +0000http://www.albertaoilmagazine.com/?p=36212The announcement by the Tsleil-Waututh Nation last week that they were "denying" Kinder Morgan permission to build its Trans Mountain expansion marks the latest stage in an ongoing - and escalating - legal battle between First Nations and industry. And as Bill Gallagher points out, one of them is on an impressive winning streak

Last week, the Tseil-Waututh Nation announced in no uncertain terms that it was not supporting Kinder Morgan’s proposed expansion of its Trans Mountain Pipeline. And while the project has had more than its share of setbacks over the last year, the press release from the TWN – one that included supporting legal statements, an environmental assessment and the assertion of a de-facto veto – might represent the most serious one yet. In order to parse rhetoric from reality I caught up with Bill Gallagher, a lawyer, former government official and the author of Resource Rulers:Fortune and Folly on Canada’s Road to Resources, the 2012 book that charted the deepening conflict between resource companies and First Nations in Canada.

MF: What do you make of the TWN’s position on Trans Mountain?

BG: What do I make of what’s happening? Well, the Tsleil-Waututh are sticking to their script. They announced in the fall that they were going to form a working group with a game plan, and now, six months later, in a step-by-step approach, which involved going down to Kinder Morgan’s annual general meeting that was in Houston and then to New York City to rock the boat with investors, they’re now coming out with their major pushback, which is scientific evidence – six particular studies to refute Kinder Morgan’s. This is what I call arguing their case in the court of public opinion. They are not worried, specifically, about the National Energy Board, which they speak disdainfully of. I have much more respect for the NEB – I think it’s under very good management and is not in a position to defend itself – but this dispute has been carried over outside the confines of the NEB. It’s now full bore in the court of public opinion, and Kinder Morgan has been badly outflanked.

MF: I talked to a few lawyers who work in this area off the record, and they said that while recent court decisions have expanded aboriginal title the claim by the TWN to jurisdiction over the coastal waters of the Lower Mainland is a major reach. How do you see it?

BG: I don’t agree with any of the comments that these off-the-record corner office lawyers made. Last month there was a unanimous British Columbia court of appeal case that basically says that aboriginal title exists, and the only reason you’d ever come to court is clarify its extent on a given particular tract. This First Nation is basically telling a sleepwalking industry that there’s been a paradigm shift on the B.C. coast, which I happen to agree with. There are industry lawyers out there who are saying that they don’t know where this commentary is coming from, that the courts are coming down on the side of First Nations consistently. But I’m at 207 native legal wins, where in B.C. in the last 15 months they have won 90 per cent of their resource sector lawsuits. It is dramatically one-sided.

MF: A few weeks back Rich Kinder, the CEO of Kinder Morgan, came out and said that he was counting on Canada to exercise and respect the rule of law. Were those comments helpful?

BG: He’s basically saying that they’re relying on the National Energy Board process, which then becomes a political process because it gets bounced upstairs to the cabinet. That’s basically saying that the Canadian rule of law, if it works in his favor, his rights will trump other rights. He’s got property rights. [But] the First Nations are coming along and saying property rights don’t trump our constitutionally protected aboriginal rights – and by the way those rights have been significantly expanded since last June.

MF: Last week’s announcement by the TWN felt – to me, anyways – as much like a political statement as a legal one. How did you interpret it?

BG: Nobody should be surprised. They announced their strategy, they’re sticking to it. The alliance started with the mayor of Vancouver seconding a resolution saying that the city is situated on un-ceded aboriginal land. That didn’t get a lot of air time, but as a strategist I saw that as his alliance with the native movement. The native movement is already in lockstep with the eco-activist movement on the coast. So now you have other municipalities joining the alliance – there’s a new person that joined today, the deputy fire chief of Burnaby, and he’s put out a very powerful commentary on the tank farm expansion on Burnaby Mountain.

MF: Has Kinder Morgan misread the landscape – legal and political – in British Columbia?

BG: They have taken the wrong approach, in my view, in strictly relying on the rule of law, because the law is changing. Social license is a huge factor. They’re being out-strategized by people they think don’t know what they’re doing. These natives are first-class strategists, and this particular group put on quite a show at the one-hour video presentation with all kinds of soundbites. It’s required viewing for anybody trying to figure out how to make progress anywhere along the coast in B.C. today.

MF: What should Kinder Morgan be doing, then?

BG: To some extent, the company has no choice but to embark on a much more proactive messaging campaign in the lower mainland. It may be too late for this particular project, judging by what the mayor of Burnaby and the deputy fire chief is saying. But when the Tsilhqot’in decision came out, I wrote a major piece for the CBC that said everybody should take a six month time out. Anybody that’s proceeding with business as usual will automatically put their project in the blender, because the last thing First Nations will stand for is a business as usual approach.

MF: A few weeks back we saw Pacific NorthWest LNG make a very generous –and very public – offer to the Lax Kwalaams band up in Prince Rupert, only to have them reject it even more publicly. What’s your take on that situation?

BG: The strategists on that project do not know the fundamentals of negotiating and closing deals with First Nations, in my opinion. That grinding of gears that you’re hearing, in the Ring of Fire, in Muskrat Falls, on Bipole III, and of course in B.C. is this industry not realizing that there’s been a massive shift in the equation, and still insisting that their rights trump everybody else’s when in fact the First Nations have never been more empowered and can decide the outcome of projects.

MF: Does that mean that First Nations now have a veto?

BG: Jeffrey Simpson has, from years ago, referred to First Nations as having a de-facto veto. If it walks, if it talks and if it looks like a veto, then it probably is a veto – that’s his quote, and it’s in the book. He was one of the first to figure out, and he’s been proven right any number of times.

MF: Can a major industrial project proceed in 2015 without substantial First Nations support?

BG: When my book first came out, I got an email from a former chairman of the NEB that said, “Bill, after going up and down that coast I can tell you that you’re right. Here’s the way I see it: if you’re a proponent and you have First Nations on side, you can do anything in Canada. If you’re a proponent and you don’t have First Nations on side, it becomes much more problematic.”

]]>http://www.albertaoilmagazine.com/2015/06/law-and-disorder/feed/3Shale: is it a boom or a bubble?http://www.albertaoilmagazine.com/2015/05/shale-is-it-a-boom-or-a-bubble/
http://www.albertaoilmagazine.com/2015/05/shale-is-it-a-boom-or-a-bubble/#commentsFri, 29 May 2015 17:52:56 +0000http://www.albertaoilmagazine.com/?p=36077That’s the question that Greenlight Capital’s David Einhorn tried to answer in a recent presentation. And given his role in calling the U.S. housing bubble, it’s well worth listening to

In November 2007, U.S. hedge fund manager David Einhorn delivered a presentation to the Value Investing Congress in New York on why he was shorting Lehman Brothers stock. His thesis, that their accounting was highly questionable and that it could eventually lead to the bank recognizing some eye-watering losses on its books that its shares weren’t currently factoring in. By the time the 2008 iteration of the Value Investing Congress rolled around Einhorn had been proven right – and scored a huge win for his fund in the process. As the Financial Times’s Ed Crooks wrote, “Reputations are made by such bold calls, and Mr. Einhorn made his.”

Well, David Einhorn is at it again. At the 20th annual Ira Sohn Investment Conference earlier this month, he delivered another presentation that took aim at another booming American industry: shale oil. And in a 92-page presentation he made the case that some of the biggest players in it look an awful lot like Lehman did pre-crash. “During the last housing boom,” his presentation noted, “St. Joe, a Florida‐based real estate company, invested heavily in land development but destroyed value. It had a million acres ‐ practically an infinite supply ‐ that aside from a few premium spots on the beach could not be developed profitably. What is an infinite supply of negative return investment opportunities worth? Not much.”

Einhorn argues that a lot of America’s biggest shale producers – including Pioneer Resources, the company on which he did the deepest dive – are making the same case to investors as St. Joe did back in the mid-aughts. “Today I’m going to describe a similar situation with certain energy companies. These companies have negative development economics, meaning that aside from a few choice locations, they don’t earn a positive return on capital, but have a nearly infinite supply of negative return opportunities. What should such a supply be worth? Not much. Yet, the share prices are very high and we believe are poised for a fall.” That’s right – a fall from current levels, which are of course a pretty far cry from where they were at this time last year.

Crooks, though, isn’t buying the Lehman analogy. He thinks a better one is the tech boom a few years earlier, which certainly produced its share of hype-driven duds but also produced out a few companies that have continued to grow and thrive. “As in any commodity business, the decisive factor will be costs,” Crooks wrote. “If shale production is more expensive than other sources of oil, it will not survive, and producers need to be able to undercut other high-cost areas such as Brazil’s deep water and Canada’s oil sands. Lower-cost shale producers can be the Amazon and Google of this new world; the higher-cost ones will be Pets.com.”

]]>http://www.albertaoilmagazine.com/2015/05/shale-is-it-a-boom-or-a-bubble/feed/0Who let the dogs out?http://www.albertaoilmagazine.com/2015/05/who-let-the-dogs-out/
http://www.albertaoilmagazine.com/2015/05/who-let-the-dogs-out/#commentsThu, 28 May 2015 16:29:38 +0000http://www.albertaoilmagazine.com/?p=36063The Doghouse Entrepreneur Pitch Competition and Presentation Theater at this year’s Global Petroleum Show will give energy entrepreneurs a chance to share their ideas. Will it produce the next great leap forward?

The Global Petroleum Show has its share of glitz and glamour, but for a lot of participants its defining characteristic is the swag. That’s probably going to be toned down at this year’s edition, but most show attendees will still walk away with their pockets heaving with free goodies. And while branded laser pointers and golf tees are nice, there’s one participant that’s giving away something truly valuable: an opportunity. Bradford Gaulin, the CEO of GOmentr and a long time entrepreneur, will be hosting the second running of The Doghouse Entrepreneur Pitch Competition and Presentation Theater at this year’s GPS. Like last year, it will give entrepreneurs a chance to present their ideas to prospective customers in a Dragon’s Den-style pitch competition. But this year, Gaulin says, sponsors will be picking up the cost of exhibit space so that the 15 participating entrepreneurs can stay for the entire three days and really build the relationships that they’ll need to carry their ideas forward.

That, he says, is the real prize of the pitch competition. Sure, it would be nice to walk away with a signed contract and a cheque, but that’s rarely how things work – at least, when it doesn’t involve television cameras and the forced drama they demand. The more important outcome, Gaulin says, is an educated and engaged customer. “I’ve been selling new technologies and innovation in the industry for 25 years,” he says, “and one of the first things you have to do is educate people. Why do we need this? Why is this a better way?” And while educating potential customers might not sound as exciting – or as lucrative – as actually selling them, Gaulin says entrepreneurs have to be willing to play the long game. “From an entrepreneur’s perspective, ten minutes of fame is really great – but to be able to talk to prospective customers and get that direct feedback constantly over a three day period is important. I’ve done five startups, and face time with potential customers is the most valuable time you can get.”

Even if they don’t make a sale at this year’s GPS, Gaulin thinks the experience can still be useful for entrepreneurs who decide to participate in the Doghouse. “Every time you pitch you get feedback and you learn where you have to adapt your pitch. The whole pitch process is iterative – you learn and adapt every time, so to be able to do it again and again is important. You get a lot of perspective, you get to refine, improve and adapt, and sometimes you even realize that you have to pivot and do something different than you expected. Ideally, everyone wants to get it to where they sign a contract or a deal, but I think it’s just as important that it helps them improve their messaging and improve their pitch to where, hopefully, somebody will actually consider them. Because the hardest thing is to get somebody to say, ‘Okay, let’s have a serious look at that.’” Entrepreneurs don’t tend to have very long to get them to that point either, Gaulin says. “When you’re pitching to customers, you’ve got to hook them. It’s a three minute pitch for the Dragon’s Den and then five minutes of feedback, but if you’re pitching a prospective customer – especially at trade shows – you’ve got maybe 90 seconds to hook them. If you don’t hit something that’s a hot button for them, they’re just going to walk on.”

And while the industry has a well-earned reputation of being conservative when it comes to embracing innovation, it’s also filled with success stories that often come from unexpected quarters. “Quite often, when we think of innovation in the oil and gas industry it’s what the latest thing that Schlumberger or Halliburton have come up with. But when we look at the things that have really changed our industry, a lot of times they’ve come from guys out in left field. I’m thinking of Jim [Malcolm] from AccuMap….I remember when Jim was out beating the streets with AccuMap, and it took years to get industry to look at it and take it seriously. And then, when it caught on, it took over. Everyone has AccuMap.”

In a special episode of the Energy Ink Podcast this month, Alberta Oil editors Max Fawcett and Todd Coyne sit down with Colby Cosh of Maclean’s magazine and Mackenzie Scrimshaw of iPolitics.ca to discuss the Alberta election’s impact on the energy sector and what surprises may be in store.

One of the biggest files on Premier-designate Rachel Notley’s desk – that is, once she officially takes ownership of said desk – is undoubtedly the province’s royalty regime and her promise to review it. Here’s hoping she doesn’t take a recent piece by Andrew Nikiforuk in The Tyee on the subject too seriously. That’s because his story, and the Parkland Institute fact sheet that informs it, spells out the very narrative that has so many energy sector executives worried – and justifiably so. Nikiforuk’s narrative is one in which the Alberta government has been deliberately under-collecting royalties (to the tune of $13 billion over the last five years) in order to enrich the industry.

That figure was drawn from royalty expert and former government advisor Jim Roy’s recent fact sheet for the Parkland Institute, in which he suggests that a miscalibration of the natural gas royalty has cost taxpayers as much as $2.5 billion annually since the latest royalty regime was implemented in 2009. But there’s just one problem: those numbers don’t necessarily tell the story that Roy or Nikiforuk want them to. Take the claim in the Parkland Institute fact sheet that the shortfall in royalties was not due to the collapse of natural gas prices from over $10 per MCF to under $4 over the period in question. “Some say it was bad luck,” the fact sheet claims. “The government points to the price and claims that nobody can control it. However, the average annual value of production was $83 billion in the five years before 2009 and $82 billion in the five years after; this is not an overall drop in price.” This is either a deliberate misrepresentation of the facts or a sloppy mistake, but either way average annual value of production is not synonymous with price. The value of production is a function of two variables, price and quantity, and it’s clear that the quantity of hydrocarbons produced in the five years after 2009 are meaningfully higher than those produced in the five years before it. Given that the average annual value of production for the two periods is the same, it stands to reason that there was an overall drop in price – and a substantial one at that.

Then there’s the idea that the province’s bitumen royalty structure contributed directly to the ballooning differential between WCS and WTI that cost producers billions over the last few years. This is, at best, a very generous reading of causality. After all, while it’s plausible to argue that an overly generous bitumen royalty structure has encouraged excess production at the margin, there’s no mention of how that structure contributed to the absence of pipeline outtake capacity that was at the heart of the so-called “bitumen bubble.” If there had been enough outtake capacity it’s unlikely that there would have been that bubble in the first place, as the most recent year’s data would have shown. The reversal (and twinning) of the Seaway Pipeline, the completion of Enbridge’s Flanagan South line and the growing volume of crude by rail shipments have driven the differential between WTI and WCS back down to the where it had traditionally been. For some reason, though, that data didn’t make it into Roy’s fact sheet.

That fact sheet argues that the government could, if it wanted to, simply roll back the natural gas royalty to where it was prior to the 2009 changes and juice its revenues by $2 billion a year. This assumes, for one thing, that the kinds of wells being drilled in 2015 are the same as the ones that were being drilled a decade earlier. But we know this isn’t the case – indeed, part of the natural gas royalty structure is calibrated to encourage the drilling of deeper and more expensive wells that tap some of the province’s more challenging formations like the Montney. Royalties also aren’t the only source of government revenue attached to the sale of mineral rights. There are also the bonus bids, and given the costs associated with drilling a gas well in 2015 it seems likely that any gains from an increased gross royalty would be eaten away, either partially or completely, by reduced bonus bids. Indeed, as a 2011 CD Howe report argued, the government of Alberta should be focused far less on increasing royalties and far more on growing the size and volume of those bonus bids.

Finally, there are the two curious recommendations made in the fact sheet, both of which appear to be clumsily disguised calls for a complete halt on new development in the oil sands. First, there’s the recommendation that the government “cease bitumen land sales until the Canadian oil price returns to par with the European price.” Given that it’s unlikely that WCS will ever trade at par with Brent given the material differences in the quality of the two crudes, that recommendation is effectively a back-door way of ceasing land sales indefinitely. Similarly, the fact sheet suggests that the government ought to “pace bitumen land sales so that bitumen production does not exceed Alberta refinery capacity.” This is self-evidently silly, given that bitumen production already dwarfs Alberta’s refinery capacity.

I’m not saying that Alberta can’t have a productive conversation around royalties, or that the current structure couldn’t be improved such that it provides more benefit to both taxpayers and producers. That’s what the NDP has promised to voters, and that’s what industry has to be hoping it can deliver. But if the NDP wants to reassure the oil and gas community that it’s not going to embark upon a repeat of 2007’s disastrous royalty review, they’d do well to make it very clear that they won’t be following the Parkland Institute’s recommendations.

]]>http://www.albertaoilmagazine.com/2015/05/the-royalty-litmus-test/feed/3Reading between the lines on OPEC and Petronashttp://www.albertaoilmagazine.com/2015/05/reading-between-the-lines-on-opec-and-petronas/
http://www.albertaoilmagazine.com/2015/05/reading-between-the-lines-on-opec-and-petronas/#commentsTue, 12 May 2015 16:51:43 +0000http://www.albertaoilmagazine.com/?p=35608OPEC thinks oil prices will stay down. The Lax Kw’alaams seem prepared to reject Pacific NorthWest LNG's olive branch. But how much stock should we put in that?

According to the Wall Street Journal, OPEC’s internal forecast indicates that oil prices will remain below $100 for the next decade. According to the Globe and Mail, the Lax Kw’alaams are poised to reject Pacific NorthWest LNG’s billion-dollar offer – and apparently by an overwhelming margin, too. And while I’m not questioning the reporting in either story, I don’t think we should put too much stock in them. After all, when negotiations play out in public, you’re rarely getting a clear look at anyone’s hand – only the hand they want you to think they have.

In the case of OPEC, that hand is a report – unpublished, and unseen by the Wall Street Journal – indicating that even in its “most optimistic scenario” oil prices will average $76 per barrel in 2025. According to the Wall Street Journal story, “It also contemplated situations where crude oil costs below $40 a barrel in 2025, the people [familiar with the report] said.” Forgive me, but I’m not quite buying this. OPEC, after all, didn’t foresee the recent crash in prices in any of its earlier reports, and so it strains credibility to think that it knows where they’ll be a decade from now. But more to the point, OPEC has a vested interest in leaking this report, given that it could theoretically influence the strategic decisions being made by American shale producers. Honesty and transparency are minor virtues at best when it comes to geopolitics, and it stands to reason that OPEC’s report is more about muddying those waters than trying to see through them.

Similarly, the Globe’s piece on the ongoing vote being conducted by the Lax Kw’alaams can be read two ways. Yes, it’s an accurate and well-reported account of the fact that the first two votes taken on Pacific NorthWest LNG’s proposal have gone unanimously against the company. But I think the most telling sentence is the last one in the piece, where Brent Jang writes that “Lax Kw’alaams Mayor Garry Reece and 12 elected councillors will make the final decision on behalf of the band.” That’s right – in theory, every single member of the band could vote against the proposal and their elected leaders could still agree to it. In other words, if you wanted to be really cynical, you might think that the news that a few hundred people have voted so publicly against the proposal – out of a community of 3,600 people, remember – is more about face-saving or negotiation than a genuine expression of intent. And even if that expression of intent is genuine, it may not matter in the end.

Don’t get me wrong: I’m not saying that OPEC fudged a report in order to put pressure on its North American rivals, or that the Lax Kw’alaams are staging and then deliberately leaking the results of their early round of voting to do the same to Pacific NorthWest LNG. But I am saying that’s a possibility, and it’s one we shouldn’t discount too heavily. Just because someone says they’ve got pocket aces doesn’t mean they actually do.

]]>It’s day two of the post-Prentice Alberta, and there’s still plenty of chatter about energy investors re-allocating capital into more favorable jurisdictions and even companies picking up stakes and leaving the province entirely. And while a lot of that is bluster, there are certainly some genuinely felt concerns about what an NDP government will do for – or to – the energy sector. If Premier-designate Rachel Notley is looking for a way to soothe those concerns, I have an idea for her. She’s in the process right now of determining who’s going to sit in her cabinet, and when it comes to filling the posts at finance and energy, well, it’s pretty slim pickings. That’s why, when it comes to choosing Alberta’s next energy minister, she should appoint someone from outside of her caucus – and from inside the energy sector itself.

Yes, this would be controversial, and it’s a pretty safe bet that her more ideologically rigid supporters would lose their minds. But, to be blunt, she doesn’t need to worry about those people. Their votes in the next election are already assured. It’s the votes to her right that she needs to retain, and the best way to do that is by reaching out in a meaningful way to the energy sector. Picking someone from outside her caucus, someone with the kind of experience and reputation and professional resumé befitting the role of Alberta’s energy minister, would go a long way towards achieving that goal.

Unelected cabinet ministers aren’t new in Canada. During World War II, Liberal Prime Minister Mackenzie King appointed an unelected lawyer named Louis St. Laurent as his Minister of Justice in order to shore up his government’s support in Quebec and ward off a looming crisis in that province over conscription. In 2006, Stephen Harper appointed an unelected financier and lawyer named Michael Fortier as the Minister of Public Works in order to flesh out his cabinet, which had no representation from Quebec. And, of course, Jim Prentice recently appointed an unelected Gordon Dirks as his Minister of Education. As Prentice told the CBC at the time, “It’s permissible under the Westminster system, and I don’t see that it’s an option that should be ruled out at this point.” I don’t see that it’s an option that Premier-designate Notley should rule out either.

If she really wanted to be Machiavellian about it, she could even encourage this person to run in Jim Prentice’s seat once she decides to call the by-election for the riding of Calgary-Foothills. After all, it’s hard to imagine voters not supporting a sitting cabinet minister, even if it is an NDP one, in a riding where they were so recently spurned by the PC candidate. But that question of where her Minister of Energy would run is one that can get answered at a later date. For now, it’s enough to note that such a move would be possible, and that there’s plenty of historical precedent for it. More to the point, Albertans pride themselves on their entrepreneurial and innovative nature, and Rachel Notley was just elected to represent them. Well, I can’t think of many things more innovative than an NDP premier picking an energy minister from outside of her caucus and inside the industry.

]]>http://www.albertaoilmagazine.com/2015/05/unconventional-oil/feed/1Keep calm and carry onhttp://www.albertaoilmagazine.com/2015/05/keep-calm-and-carry-on/
http://www.albertaoilmagazine.com/2015/05/keep-calm-and-carry-on/#commentsWed, 06 May 2015 18:05:28 +0000http://www.albertaoilmagazine.com/?p=35540Why the new Notley government isn't likely to start a war with the energy sector

]]>You’d think that hell freezing over would be good for the energy sector, given what that would do for demand for fossil fuels. But when it comes in the form of an NDP win in an Alberta provincial election, and a crushing win at that, the energy sector’s response is decidedly – and understandably – less enthusiastic. Canoe Financial’s Rafi Tahmazian described the NDP win as “completely devastating” in a Bloomberg story, noting that “the perception from the market based on their comments is they’re extremely dangerous.” Martin Pelletier, a portfolio manager at TriVest Wealth Counsel, described the win as a “clear and material negative.” And while the markets don’t quite seem to share the same perspective – the TSX Energy Subindex is off 2.06 per cent on a day when the overall market is down by more than one per cent, and is in the midst of what appears to be a technical correction – it’s clear that investors are nervous.

That nervousness is a gut reaction, and it’s an understandable one. After more than four decades of life under the same party, and one that clearly understood the needs and interests of the energy sector, a bit of fear and loathing is to be expected. The CalgaryHerald‘s Licia Corbella summed that up on Twitter last night when she wrote that “the oil patch will pack up and leave. Woe is us.” But will they? And are we? I’m not as sure as Ms. Corbella about that. As Andrew Leach noted in his excellent Maclean’spiece on the NDP’s energy policies and positions, they’re not the fire-breathing leftist radicals some might think. “I can conclude that an NDP government would certainly lead to changes in Alberta, but perhaps not of the radical sort feared by many in the province. In fact, on many issues, it’s hard to find a lot of daylight between NDP policies and those of the other two front-running parties. Their answers give you enough room to believe the worst, if that’s what you want to believe, but also leave room for benefit of the doubt.”

Yes, Premier Notley (that still feels weird to type) has pledged to raise corporate income taxes, but her platform calls for them to be raised from 10 per cent to 12 per cent. That’ s lower than they were before 2004, and on par with most provinces in Canada – including, most importantly, Saskatchewan. Yes, that would push Alberta’s corporate tax rate one per cent above British Columbia’s, and that’s something that Notley ought to be mindful of when contemplating any changes to the corporate rate. But I’m not sure it’s significantly high enough to incent many companies to shift their head office locations out of the province, as some have suggested.

In terms of royalties, she’s pledged not to engage in a review until commodity prices are stronger, and even then she’s promised that it will be an independent process. As the Globe and Mail noted today, “If Ms. Notley is true to her word, such a review will be truly independent, and will not necessarily raise royalty rates, if doing so would damage the industry.” And while her comments about Northern Gateway were discouraging for some in the energy sector, they were also more political theater than actual policy. Gateway doesn’t need the provincial government’s support in the first place, and the fact that it’s still stuck in limbo despite having the previous government’s fullest support should tell you what that’s really worth.

Then there’s the broader concern that, like some previous NDP administrations, she’ll put the interests of labor above those of the economy. That seems unlikely to me. For all of her apparent virtues, Rachel Notley is still a politician. And in my experience, if there’s one thing a politician enjoys more than anything else, it’s remaining a politician. She’s not going to govern in a way that opens the door to a resurgence from the right, whether that’s in the form of a reinvigorated PC Party, a more mainstream Wildrose or a merger of the two. And because there are no political parties to her left, it stands to reason that she’s going to govern to her right – possibly way to her right in the eyes of some of her more ardent supporters.

And while Notley has campaigned almost entirely in the land of idealism and possibilities, she now faces the task of governing – a job that takes place in reality’s back yard. She has a caucus that is almost entirely filled with new MLAs, and even the more senior members of her team have never been in government or held a cabinet position. As such, she’s going to spend the bulk of her time for the foreseeable future learning the mechanics of being in power and of spreading that knowledge among her cabinet and caucus. They’re going to need to learn how to work with senior bureaucrats, how to deal with the media and how to resist the pressure that will surely be applied by organized labor, First Nations groups and anyone else who feels that it’s their turn to share in the spoils of power. In that kind of an environment, picking a fight with the province’s biggest and most powerful industry just isn’t on the table.

Finally, she’s going to need the energy sector if she’s going to fulfill the promises she’s made to Albertans. Tax and royalty revenue from the oil and gas industry will be needed to pay for the new schools, cancer treatment centers and other forms of social infrastructure she’s said she intends to invest in. As such, it makes no sense to do anything that would harm those revenue streams or the companies that produce them. So, panic if you like, and worry if you must. But my suggestion, on this day after the most important election in Alberta’s history, is to just keep calm and carry on.

]]>http://www.albertaoilmagazine.com/2015/05/keep-calm-and-carry-on/feed/9First Nations, the law and the importance of listeninghttp://www.albertaoilmagazine.com/2015/05/first-things-first/
http://www.albertaoilmagazine.com/2015/05/first-things-first/#commentsWed, 06 May 2015 07:00:27 +0000http://www.albertaoilmagazine.com/?p=35215And why asking the right questions will always produce better answers

You know that old saying that it’s better to ask for forgiveness than permission? Well, when it comes to the relationship between industry and First Nations, it really couldn’t be much further from the truth. Indeed, doing business by asking for forgiveness rather than permission is a pretty good way to ensure that you’ll get neither, and that’s particularly true in an environment where First Nations are more willing than ever to stand up for their rights – and against the wrongs they believe have been done to them.

The courts are pretty clearly on their side, too. In April, the British Columbia Court of Appeal ruled in favor of the Saik’uz and Stellat’en First Nations in a case that further solidified the primacy of aboriginal title. The two nations alleged that Rio Tinto Alcan’s Kenney Dam, which was built in the 1950s, had damaged the Nechako River system and the fisheries that depended on it. But a lower court had rejected their case against the aluminum giant on the basis that they first had to establish their title before they could sue Rio Tinto Alcan for breaching it. That lower court’s decision was overturned, the latest in a string of verdicts — the most recent, and most important, being last year’s Tsilhqot’in decision — that have clarified the rights that aboriginals have over their land.

Those rights aren’t news to the majority of those who work in the energy sector, and it’s certainly not news to anyone whose day-to-day responsibilities involve interacting with aboriginal groups. It’s also not a deathblow to the energy sector’s desire to see oil and gas exported off the west coast of British Columbia. Most First Nations are willing to do business under the right conditions. Theirs is rarely the kind of opposition that you might find in, say, Vancouver, where willful ignorance doesn’t come with the kinds of costs attached to it that it probably should. First Nations communities need jobs, economic development and all the other benefits that come with resource extraction. But they’ve served notice that those aren’t going to be the products of a relationship where industry acts first and ask questions later. They expect to be full partners in the process, and that means having the right to say no as well as yes.

I think this means a new outlook on how to get projects – and, yes, pipelines – built in Canada is needed. Yes, the courts have made it clear that a pipeline won’t get built without the full and informed consent of every First Nation that’s affected along any potential route. But rather than looking at those communities as obstacles to be overcome, the energy sector should treat them as business partners in waiting. And if it asks the right questions, it might just get the answer it’s been looking for all along.

]]>http://www.albertaoilmagazine.com/2015/05/first-things-first/feed/1Shock and awehttp://www.albertaoilmagazine.com/2015/05/shock-and-awe/
http://www.albertaoilmagazine.com/2015/05/shock-and-awe/#commentsFri, 01 May 2015 18:24:11 +0000http://www.albertaoilmagazine.com/?p=35515Why Pacific NorthWest LNG's whopper of an offer could be a turning point for the energy sector's interactions with First Nations in British Columbia

For the last few months there’s been plenty of speculation over whether Pacific NorthWest LNG, the project being driven by Petronas, would proceed with a final investment decision. And while there’s nothing formal yet on that front, the announcement today that it’s offering more than $1 billion to the Prince Rupert-based Lax Kw’alaams band in exchange for its support suggests that it’s very, very close to making one. As the Globe and Mail’s Justine Hunter and Brent Jang reported today, “if approved by band members, the agreement will transfer roughly $1-billion in cash to the Lax Kw’alaams band over the span of the 40-year deal, while the B.C. government is putting more than $100-million worth of Crown lands on the table. For the 3,600 members of the Lax Kw’alaams community, the total package works out to a value of roughly $320,000 per person.”

Members of the Lax Kw’alaams will vote on the offer this month, and with a show of hands, no less, which ought to set some sort of world record for the largest deal approved without formal ballots. In addition to the cash consideration, job training and direct employment that Pacific NorthWest LNG has put on the table, it’s also pledged to protect a local salmon habitat near the project’s proposed site on Lelu Island and create a fisheries compensation fund for any damage to it that might result. It’s an attractive offer, in other words, the diplomatic equivalent of a shock and awe campaign.

If it works, it will have repercussions that extend well beyond Prince Rupert. First and foremost, it almost certainly sets a bar – or a floor – on future negotiations with impacted First Nations groups. If it wasn’t clear already, this potential deal reveals what the table stakes are for getting a deal done, both in terms of the dollars involved and the approach behind them. First Nations in British Columbia will, quite rightly, expect to be treated as full partners in these projects rather than post-facto supplicants to any wealth they might create.

But if Pacific NorthWest LNG can reach an agreement with the Lax Kw’alaams band, it will demonstrate that a negative first impression doesn’t necessarily doom a project in the eyes of First Nations that stand to be affected by it. As Hunter and Jang reported, “Just a year ago, such an agreement seemed unlikely: ‘Petronas is aggressive to the point of being offensive to and seems, as a corporation, to have no idea how to successfully operate in Canada with aboriginal people,’ the Lax Kw’alaams said in a report in March, 2014. ‘Petronas does not seem to understand that a social licence to move ahead with their project is not something they give to themselves.’” That seems to have changed. If it has, it could mean that there’s still a chance to save other pipeline projects that have run into substantial opposition on the other side of the Rocky Mountains.

]]>http://www.albertaoilmagazine.com/2015/05/shock-and-awe/feed/1Energy Services Breakfast: Scott Treadwell has been there, done thathttp://www.albertaoilmagazine.com/2015/05/energy-services-breakfast-scott-treadwell-red-deer/
http://www.albertaoilmagazine.com/2015/05/energy-services-breakfast-scott-treadwell-red-deer/#commentsFri, 01 May 2015 11:00:13 +0000http://www.albertaoilmagazine.com/?p=35443Treadwell impressed everyone at the first Energy Services Breakfast. In advance of the second, which takes place on June 18th in Red Deer, find out more about what makes him tick

TD Securities director of equity research Scott Treadwell says he doesn’t golf much these days. That’s because, he jokes, after five years in the Canadian Navy and five in the drilling business he already knows how to swear well enough already. And while his days of drill instructors and drill bits are behind him, he still puts a premium on the discipline and hands-on knowledge he picked up in the field and at sea. It’s the kind of real-world perspective that can elude those who jump into finance as a first or even second career. To his credit, taking up finance as a career move never crossed his mind.

Instead, he enrolled in the University of Calgary’s MBA program and studied finance after the 2008 recession with a view to moving up through management within the energy services sector. But Treadwell’s engineering experience and data analysis expertise meant that one of his first stops out of school was with the National Energy Board, as a gas supply analyst, before he moved on to TD Securities. “I certainly couldn’t have seen it going this way,” he says. “But, if you can make the transition, usually what you’ve done in your past careers can be very valuable to you in the finance world.”

Treadwell, who has covered the energy services side for TD Securities since 2010, says there’s no such a thing as a run-of-the-mill cycle in the energy business. While ups and downs may be part of the nature of the beast, it doesn’t mean the beast has to eat your lunch on every downturn. “I fully believe you can structure your company and run your business in such a way as to take out the highest highs and lowest lows and you can sleep at night no matter where you are in the cycle,” he says. “And that’s not just the energy industry, but Alberta in general – when you talk about governments or people and their finances or people running companies – there’s far too much feeling like we’re at the far end of the whip and we just get snapped around. But the truth is you can structure your personal finances, your company and the government in such a way that you don’t have that kind of volatility.”

Avoiding volatility hasn’t always been Treadwell’s modus operandi. For his leadership and conduct during NATO missions in Europe and the Adriatic, he was awarded a Canadian Forces Special Service Medal recognizing those who take part in military operations under exceptional circumstances. As staff navigator for NATO’s Atlantic Fleet, Treadwell learned a lot about risk assessment and forecasting events – skills which still serve him in the boardroom 15 years later. But when he’s not worrying about other peoples’ money woes, Treadwell would much rather be with his wife and three children, playing hockey, or playing rugby – though rarely all at the same time.

]]>http://www.albertaoilmagazine.com/2015/05/energy-services-breakfast-scott-treadwell-red-deer/feed/0The Energy Ink Podcast: Dark days ahead for Petroleum Geoscientists & the value of an Arts Degreehttp://www.albertaoilmagazine.com/2015/04/the-energy-ink-podcast-episode-four/
http://www.albertaoilmagazine.com/2015/04/the-energy-ink-podcast-episode-four/#commentsTue, 28 Apr 2015 18:03:09 +0000http://www.albertaoilmagazine.com/?p=35389This month on the podcast we talk job prospects with some University of Alberta grads and discuss the problem that Millennials are posing for the automakers & the oil industry

We talk to recent University of Alberta grads about the dark days ahead for petroleum geoscientists; editors Max Fawcett and Todd Coyne discuss the value of an arts degree and the problem that Millennials pose for automakers and the oil industry.

And, as always, we return with The Number and our oil price predictions for May.

]]>http://www.albertaoilmagazine.com/2015/04/the-energy-ink-podcast-episode-four/feed/0Return on Investmenthttp://www.albertaoilmagazine.com/2015/04/mark-becker-mba-suncor/
http://www.albertaoilmagazine.com/2015/04/mark-becker-mba-suncor/#commentsTue, 21 Apr 2015 14:00:56 +0000http://www.albertaoilmagazine.com/?p=35134One of Suncor’s key executives reflect back on the program that helped get him there

]]>Mark Becker had a bachelor’s degree under his belt, a decade’s worth of experience at Dow Chemical and three more at Suncor. But in 2000 he decided that it was time to take a break from his career in order to really get ahead in it, and so he enrolled in the Alberta MBA in Natural Resources Energy & Environment. Today, he’s the vice president of oil sands ventures at Suncor, and says the decision to head back to school is one of the better ones he’s ever made.

On his MBA experience:
“Whatever I thought about prior to doing it or whatever I’d looked at, it was kind of a factor of magnitude more than I even expected I’d get. The experience of working with other professionals in that kind of a context and environment was great. MBAs are all about teamwork, and you end up working together with a lot of people in the industry, and the natural resources and energy specialization meant that most of the people – in fact, all of them – were in the same line of work. What I learned from that, and the broader perspective it provided, really helped me a lot.”

On the payoff he saw:
“When I moved to Calgary the first time and I worked right in the corporate planning office, I was sitting with Rick George and working with our executive leadership team. Ken Alley at that time was our CFO, and I could tell that he could tell that this guy [me] knows a few things, and can talk about debt and equity and cash flow and balance sheets and income statements and MD&A. This operational guy that showed up here actually knows something about this. It was all through that [MBA program]. It’s obvious I could speak the lingo and understand the broader concepts.”

On why it might not be a great idea to head straight into an MBA after finishing your undergraduate degree:
“The MBA is all about the conversations. You’re doing this group work, you’re working with other professionals and people from the industry, and I could really see the folks that came straight through or very soon after their undergrads had a real hard time keeping up. They weren’t able to carry their part of the conversation very well, and they certainly weren’t contributing a ton. So I struggle to see the benefit for someone who’s coming immediately out of school. I see a ton of benefit for someone who’s ten years in. But wait another ten years? Well, you’ve kind of missed the boat.”

On why it’s best to look before your leap:
“This is easy for me to answer because I keep handing out this advice to people I interact with in my own circle. Be directionally clear on your career and your career desires. That’s one thing that I learned, and I’m really glad I did. If you’re directionally clear on what you want to do, the choices you make and the things you invest in are kind of congruent with that. By the same token, if you’re someone like me who works for somebody else you can be very clear with them on what you want to do – and what you don’t want to do. When the job offers and opportunities come, you can say yes or no and be on firm footing.”

On why an MBA can’t be an end unto itself:
“It’s a huge investment of your time and, depending on your family situation, it can be a huge commitment for your family. So it’s good to be clear about what you’re trying to go – what’s the knowledge you’re gaining, and what career direction are you trying to support or enhance?”

]]>http://www.albertaoilmagazine.com/2015/04/mark-becker-mba-suncor/feed/0What can energy service companies learn from behavioral scientists and Balinese monkey hunters? More than you’d thinkhttp://www.albertaoilmagazine.com/2015/04/what-can-energy-service-companies-learn-from-behavioral-scientists-and-balinese-monkey-hunters-more-than-youd-think/
http://www.albertaoilmagazine.com/2015/04/what-can-energy-service-companies-learn-from-behavioral-scientists-and-balinese-monkey-hunters-more-than-youd-think/#commentsMon, 13 Apr 2015 18:03:34 +0000http://www.albertaoilmagazine.com/?p=35051Running a service company in a challenging environment is something that Pat Ross, the CEO of Hyduke Energy Services, knows a thing or two about. Read our Q&A with him, then listen to the full conversation

Running a service company in a challenging environment is something that Pat Ross, the CEO of Hyduke Energy Services, knows a thing or two about. That’s what the people who attended this year’s first Energy Services Breakfast found out, and that’s why we decided to give up a call recently as he was driving down Highway 2 to sum up some of his choicer pearls of wisdom. Here’s what he had to say.

MF: What should energy service companies be thinking about in the current market environment?

PR: How to pay your bills. How to not lose cash. There’s a great book that was written quite some time ago called “Who Moved My Cheese,” and the premise was that you had a scientist who made a box with ten lanes and a glass top, and at the end of lane three he put a hunk of cheese. Every morning for four months he put a rat in that maze, and on the first day the rat sniffed, found the cheese that was in lane three and then every day for the next four months went down lane three and voila, there was the cheese. Then one day the scientist pulled the glass cover off, put the cheese at the end of lane nine and put the rat back in the maze. But he didn’t sniff around – he just simply went down to the end of lane three and waited. He could smell the cheese, and he knew it was there, but he just assumed it would be at the end of lane three eventually. I think that analogy could be used in today’s environment.

Patrick Ross on sales: “Ask them what they hate about you and stop doing it. Ask them what they love about you & do more of it.” #ESB2015

MF: What can people running energy service companies learn from those who trap monkeys for a living?

PR: Do you know how they hunt monkeys in Bali? They use a Balinese monkey trap – it’s a coconut with a one-and-a-half inch hole at the top and four small holes cut in the sides with string that gets strung through it. They tie the coconut about two feet of the ground between two trees with the string, and then they take a shiny object with a bit of banana scent on it and put it inside the coconut. The monkey walks down the trail, smells the banana, looks inside and sees the shiny object, slips its hand inside the hole to grab the object, makes a fist and then finds itself unable to pull its hand out of the coconut. The only way it could is if it dropped the shiny object, but it doesn’t want to lose the shiny object. A hunter comes down the trail with a sack over his shoulder, throws the sack over the monkey, rips his hand out of the coconut, smashes the monkey against a rock and eats him. The lesson there is that sometimes you have to let go. It works in relationships, and it works in business, and I think what’s going to kill oilfield services companies – or any company, in this environment – is sticking to their tried and true way of doing things. Because that environment doesn’t exist anymore.

MF: How hard is it to modify your behavior in a downturn – to look for where the cheese is now rather than relying on where it’s been before? It seems to me that human instincts is such that, in a crisis, people will revert back to the things they know best.

PR: Absolutely – and that’s why there are people in insolvency groups licking their chops right now, It’s the most profitable portion of a legal firm’s work, and it’s the most profitable part of an accounting firm’s work. And if it wasn’t for people making that mistake over and over again you wouldn’t need those guys. A lot of guys think they can borrow themselves out of trouble. And so you’re going to see a lot of detritus on the side of the road because of that as well. Now’s the time to not spend cash, but the last six years have been wine and roses, and we’ve gotten really really good at spending cash.

]]>http://www.albertaoilmagazine.com/2015/04/what-can-energy-service-companies-learn-from-behavioral-scientists-and-balinese-monkey-hunters-more-than-youd-think/feed/0Another inconvenient truthhttp://www.albertaoilmagazine.com/2015/04/another-inconvenient-truth/
http://www.albertaoilmagazine.com/2015/04/another-inconvenient-truth/#commentsFri, 10 Apr 2015 18:49:40 +0000http://www.albertaoilmagazine.com/?p=35038The fuel spill spreading across English Bay in Vancouver (and throughout social media) today isn't going to help the energy sector's prospects of getting pipelines built on the west coast. Why Stephen Harper bears direct responsibility for it - and the inevitable fallout

Remember when I said in my March editor’s note that Stephen Harper wasn’t helping the energy sector? Well, I think it’s fair to say that what’s unfolding off the coast of Vancouver right now is another demonstration of that. No, the energy sector had nothing to do with the spill of approximately one tonne of bunker fuel, one that’s already made its way to beaches around the region. But you can be certain that the images of an oil-slicked English Bay will be used by environmental activists, and shared on the Facebook pages of thousands of people, in order to argue that more tanker traffic in the region is a bad idea. And while Kinder Morgan made it clear yesterday that it had absolutely nothing to do with the spill, it stands to reason that they’ll end up paying the price for it all the same. Just look at the headline in the left-leaning (but widely read) Georgia Straight this morning: “Oil spill in English Bay called ‘scary reminder’ of risks of increased tanker traffic due to Kinder Morgan pipeline,” it read.

I’m not suggesting that the Prime Minister is responsible for the fact that a ship – carrying grain, not crude – dumped a bunch of bunker fuel into the ocean. But I am very much suggesting that he’s responsible for the decision to close the Kitsilano Coast Guard base in 2013, one that, as its former commanding officer Fred Moxey told local radio station CKNW yesterday, could have responded much more quickly to the spill and potentially prevented it from spreading as far as it has. Moxey said that the hovercrafts that are located at Sea Island, and which replaced the more robust boats at the coast guard station in Kitsilano, can’t even go into an oil slick, and that if the Kits base were still actively staffed today it could have been at the scene in six minutes with the equipment needed to deal with it.

The decision to shutter the Kitsilano base wasn’t a secret to the Prime Minister, either. Both Vancouver mayor Gregor Robertson and BC Premier Christy Clark pleaded with him not to proceed with the closure, noting that it could potentially put lives – and nearby marine ecosystems – in jeopardy. A group of local fire and police chiefs also wrote to the Prime Minister to express their concerns about the decision, and local residents were downright outraged. But the Prime Minister defended it, saying that, “The paramountcy of government resources in this area is on public safety and the government is allocating its resources in a way that we believe, based on the advice we have received from the coast guard, that is best in terms of public safety.”

Whether it’s best for public safety or not remains to be seen. Jody Thomson, the deputy commissioner of operations for the Coast Guard, told the Canadian Press in 2013 that the closure would “have an effect,” but said that reaction times would “remain within international standards.” But the effect on the energy sector is much less ambiguous. By not having the right equipment and personnel in place to handle this spill, the Prime Minister has effectively turned a minor incident into a major calamity, and handed the energy sector’s opponents another piece of propaganda that they won’t hesitate to use.

]]>http://www.albertaoilmagazine.com/2015/04/another-inconvenient-truth/feed/5Anti-pipeline and anti-vaccination campaigns share more than you thinkhttp://www.albertaoilmagazine.com/2015/04/communications-breakdown/
http://www.albertaoilmagazine.com/2015/04/communications-breakdown/#commentsThu, 02 Apr 2015 07:00:39 +0000http://www.albertaoilmagazine.com/?p=34715When it comes to the energy sector’s future - and yours - talk is anything but cheap

If the recent debate over childhood vaccinations sounds vaguely familiar, that’s because it should – you’ve been hearing a variant of it for years now. The thinking of those opposed to getting their kids vaccinated – if one can even call it thinking – has the same self-selecting, bias-confirming tendencies as that of the more ardent anti-pipeline activists, and the more evidence you marshal in favor of vaccination (or pipelines) the more they retreat into the recesses of their own argument.

That’s why being able to communicate effectively is more important to the energy sector than it’s ever been. Communications may have once been a secondary consideration for energy companies, but as the ongoing debate over pipeline projects demonstrates each and every day, it’s now at the top of the list – at least, for the companies that are truly paying attention. It is no longer enough to provide the information the public is increasingly demanding. In 2015, you have to be able to transmit that information in a way that the public – and, yes, even the anti-vaxxers in the crowd – are willing to give it a fair hearing.

And for those who do choose to take up the challenge of helping the industry communicate more effectively, I’d like to offer up a few free words of advice. First and foremost, it’s time for you – for us – to start fighting fire with fire. We can line up as many facts as we want about the energy sector’s economic and environmental contributions, but so long as our opponents are trading in emotions – and they are – we’re going to continue to get beat in the court of public opinion. As the rise of the anti-vaccine movement has demonstrated, facts will almost always take a back seat to feelings, and there are elements within the coalition of those opposed to the energy sector who display similar tendencies towards intellectual cherry picking and willful cognitive blindness. We’re not going to win them over by showing them facts they don’t want to see or hear, no matter how elegantly we happen to present them. Instead, it’s time to pull at the heartstrings, and to go for the guts.

And that’s not easy. That takes skill. Fortunately, it’s a skill set that can be taught – and learned. We just have to start putting the right premium on it.